Dave Dykstra is a guest blog writer and Financial Advisor.
The Great Recession has taught me a lot of lessons. These lessons have helped me become a better financial adviser, as well as a better role model for my three daughters. I am a big proponent of accepting responsibility for any situation. While it is easy to blame the president, or the big banks, or wall street for what happened in 2007 and 2008, this is not a very productive activity. Instead, I want to take a close look at what my role in the situation was, and how I can learn from it. Quite simply, I too enjoyed the life of easy credit. I didn’t have to live on a balanced budget, because I could just borrow more to make up the difference. Thankfully, my daughters were too young to learn from this behavior. My wife and I have had to learn to live within our means and to re-learn the hard lessons of money. I think it is important for our country’s future and for our kids’ well-being to pass on these lessons to them..
First of all, I want to start with a disclosure. The following activities that I am describing are activities my wife and I have decided are best for our family. There are many other good ideas and ways to teach our kids the same lessons. This blog is meant to inspire you. I look forward to reading posts of other ways to teach these lessons so we can all learn from each other!
The first lesson that I think is important to teach our kids is how to earn money. Money earned is so much more gratifying than money borrowed. Each of our daughters is given an allowance of half her age in dollars each week. In return, she is expected to choose two chores that are designated to each of our family members each week (by picking from a jar). She is also expected to pick up her stuff. If by the end of the week, the stuff around the house that mom put in each of their bins is not put away, she may earn an item back by doing one of mom’s chores.
The other way we encourage our kids to earn is by the old fashioned methods, such as raking neighbors leaves, shoveling snow, etc. I am there to supervise the work and make sure our neighbors are receiving value in hiring our children. The activities of making fliers, delivering them door-to-door, and then working for someone else is teaching them valuable skills for their futures.
The second lesson I believe that is critical to the success of the next generation is how to save. As a society we stopped having to save. Layaway became as extinct as the dinosaurs. Our girls are given three separate piggy banks, or jars. The first piggy bank is where each of them puts her savings. Eventually my daughters saved enough in their piggy banks that we opened up a bank account and taught them the importance of earning interest and compounding. However, to get started, buying an old fashioned piggy bank was more than sufficient. Each week, when I pay my girls, I give them 80% of their money in one pile, 10% in another for saving, and 10% in the third which will be discussed later. The girls are given free reign to spend their 80% on whatever they’d like. The other 10% is put away for future large purchases. My ten year old is working hard to save up money for an iphone when she gets older.
There is an important point to be made here. Your children will spend their 80% on stuff that will make you cringe! I believe you need to let your kids have this freedom, because sooner or later they are going to obtain it anyways. In addition, an important life lesson is learned when one of my daughters asks us to attend an event at school and we ask them if they are able to pay for it, and their answer is no. Eventually, they catch on that spending an entire week’s allowance at 7-11 the first day they receive it isn’t such a great idea!
The third lesson that I believe is crucial to the success of our kids is to teach them how to give a portion of what they earn. Whatever religion you may be, it is important to acknowledge that the corporate “we” is much bigger than the individual “me”. Whether you believe in the Biblical principle of tithing or in the buddhist teaching of good karma, our world needs our kids to become generous people. In addition, I believe that it is impossible to receive good things and gifts from others if we are too busy holding on to what we have with tight fists. As some of you may have guessed, that is the purpose of the third piggy bank in our home. Our kids put the last 10% into that jar and we give them the choice on who to give that money too. Just this past summer, my kids chose to donate a fairly substantial check to TLC animal shelter in our neighborhood!
Teaching our kids about finance and money has a lot of benefits. It brings some sanity into our home. It teaches our kids how to become responsible with money. It teaches our daughters to be generous people. I hope you all will have the same experience and look forward to reading your stories!
First of all, I want to start with a disclosure. The following activities that I am describing are activities my wife and I have decided are best for our family. There are many other good ideas and ways to teach our kids the same lessons. This blog is meant to inspire you. I look forward to reading posts of other ways to teach these lessons so we can all learn from each other!
The first lesson that I think is important to teach our kids is how to earn money. Money earned is so much more gratifying than money borrowed. Each of our daughters is given an allowance of half her age in dollars each week. In return, she is expected to choose two chores that are designated to each of our family members each week (by picking from a jar). She is also expected to pick up her stuff. If by the end of the week, the stuff around the house that mom put in each of their bins is not put away, she may earn an item back by doing one of mom’s chores.
The other way we encourage our kids to earn is by the old fashioned methods, such as raking neighbors leaves, shoveling snow, etc. I am there to supervise the work and make sure our neighbors are receiving value in hiring our children. The activities of making fliers, delivering them door-to-door, and then working for someone else is teaching them valuable skills for their futures.
The second lesson I believe that is critical to the success of the next generation is how to save. As a society we stopped having to save. Layaway became as extinct as the dinosaurs. Our girls are given three separate piggy banks, or jars. The first piggy bank is where each of them puts her savings. Eventually my daughters saved enough in their piggy banks that we opened up a bank account and taught them the importance of earning interest and compounding. However, to get started, buying an old fashioned piggy bank was more than sufficient. Each week, when I pay my girls, I give them 80% of their money in one pile, 10% in another for saving, and 10% in the third which will be discussed later. The girls are given free reign to spend their 80% on whatever they’d like. The other 10% is put away for future large purchases. My ten year old is working hard to save up money for an iphone when she gets older.
There is an important point to be made here. Your children will spend their 80% on stuff that will make you cringe! I believe you need to let your kids have this freedom, because sooner or later they are going to obtain it anyways. In addition, an important life lesson is learned when one of my daughters asks us to attend an event at school and we ask them if they are able to pay for it, and their answer is no. Eventually, they catch on that spending an entire week’s allowance at 7-11 the first day they receive it isn’t such a great idea!
The third lesson that I believe is crucial to the success of our kids is to teach them how to give a portion of what they earn. Whatever religion you may be, it is important to acknowledge that the corporate “we” is much bigger than the individual “me”. Whether you believe in the Biblical principle of tithing or in the buddhist teaching of good karma, our world needs our kids to become generous people. In addition, I believe that it is impossible to receive good things and gifts from others if we are too busy holding on to what we have with tight fists. As some of you may have guessed, that is the purpose of the third piggy bank in our home. Our kids put the last 10% into that jar and we give them the choice on who to give that money too. Just this past summer, my kids chose to donate a fairly substantial check to TLC animal shelter in our neighborhood!
Teaching our kids about finance and money has a lot of benefits. It brings some sanity into our home. It teaches our kids how to become responsible with money. It teaches our daughters to be generous people. I hope you all will have the same experience and look forward to reading your stories!
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