I’m going to create a series of blog posts called “Flip-Flop” where I share long-held beliefs I’ve changed my mind about after getting older, after new experiences, after conversations with people, and/or after repeated failed attempts at being successful operating on those original beliefs.
I was listening to a Tim Ferriss Show interview with Pete Adeney aka Mr. Money Mustache – and he shared that he (1) doesn’t give his son an allowance – he doesn’t want him to think that money comes from out of nowhere; (2) pays him for riding his bike – an incentive to get fresh air and exercise; and (3) created a “Bank of Dad” – where he gives his son interest for money that is saved versus spent.
I disagree with #1, want to modify #2, and will incorporate #3.
I understand the thought process behind #1, however my upbringing and faith direct this matter. I do want my kids to know that money is worked hard for and earned – for sure, and that’s why I have a career and multiple companies to model for them; but I also want them to know that they are provided for and more…just like my Heavenly Father wants us to trust Him – and that they don’t need to stress or worry.
“Consider the ravens: they neither sow nor reap, they have neither storehouse nor barn, and yet God feeds them. Of how much more value are you than the birds!” (Luke 12:24)
The world has enough problems for a kid (they grow up so fast and are surrounded by confusing and negative stimuli), and most relationships are torn because of money (not enough of it, less time is spent with family to make it, etc.). I want to eliminate the money issue from their list of heavy and ever-growing challenges that come with life.
Their basic needs are met – clothes, food, shelter, education – and their weekly allowance lets them take care of their wants and it’s an opportunity to practice – consistently and without fail – good habits on how to manage their funds.
We currently pay them $10 a week, and their money is split as follows:
- The first 10% of the money is tithing – money that goes to God ($1)
- The next 40% goes towards savings – to emergencies and very large future purchases like a car ($4)
- The remaining 50% goes towards spending ($5)
Money that is given as a gift (birthday, Lunar New Year) doesn’t count – it’s their bonus.
The goal of 50% is to program their mind to live below their means, and that it’s truly possible to enjoy life with discipline.
As for #2, I am inspired by it – but instead of exercise (my kids love being out and exercising already), I’d like to teach them about entrepreneurship, and thinking of a smarter way to earn money. My wife has been teaching my kids how to make soap and laundry detergent – and that might be their first “lemonade stand” style business – where we can teach them how to cost ingredients, source them from the best quality and priced supplies, package and design them for optimal reception, marketing, sales, management, etc.
More details on that as we move along, but I think that’s an awesome project and teaching opportunity.
I spoke with my wife about #3 and we’re totally on board with creating a “Bank of Mom & Dad” and giving them interest for money they decide to save versus spend. I think it’ll help them understand that their dollars are “green employees” that will work for them if they save and deploy them in the right place, to think twice about what they buy and how much it’ll truly make them happy and for how long, and to live on less.
What practices do you employ around family and finances?