Tuesday, October 04, 2011

GUEST BLOG POST: Raising Financially Savvy Kids by Linda and Richard Eyre

One of the most frequent mistakes parents make, and one that is actually easier to make by more financially established parents, is to give kids license too early and responsibility too late.

In an effort to give our children every advantage, we sometimes inadvertently give them the negative and unintentional gift of indulgence. By giving them too much, we take away their chance to develop self-motivation, self-discipline, self-esteem, and self-control.

All of these self-developed gifts are fostered by an environment of responsibility, equity, and perceived ownership; and they are undermined by an environment of entitlement.

When kids are given too much, when they don’t have to work for anything or wait for anything, they lose motivation and initiative—they even lose creativity and the ability to figure out what they really want and how to get it.

Furthermore, when they demand and are given whatever they want, they do not perceive real ownership and thus have no sense of pride or inclination to care for and protect things.

On the other hand, if they work for something, or save for it, or sacrifice or give something up for it, they feel a true, earned ownership that is the prerequisite to responsibility and the antidote to entitlement.

It is relatively easy to change your household from an “entitlement economy” to an “enterprise economy.” Eliminate hand-out allowances and institute a new family system of earning, budgeting, saving, and choosing. Get a big wooden box with an impressive lock and designate it as the family bank, in which kids can have accounts. Get them checkbooks so they can put money into the bank with a deposit slip and get it out by writing a check. Explain that a certain amount of money comes into the family and that those who share in the work deserve a part of the income. Negotiate and assign tasks from dishes to cleaning common areas of the home and even include things like the timely finishing of homework and music practice. Have kids keep track of their completed tasks with a pegboard or chart or computer program that requires a parents’s approval. Change Saturday from “allowance day” to “payday” where a well-performing child can earn enough to buy “all his own stuff” rather than having to ask you for it. Have him bring his checkbook to the store and write checks to you (on the family bank) for what he wants, always keeping track of his balance in his check register. Have the bank pay interest on money saved. Make your home and family economy into a little microcosm of the real world and the real economy.

By focusing on preparing our children to live in the real world and the real economy, we can also create a home environment where money, instead of being the thing that spoils and entitles children, can be the raw material with which they learn to work, to save, to wait, to budget, and to give. And that, when you think about it, is a pretty good definition of “responsibility.”

Richard and Linda Eyre are among the most popular speakers in the world on parenting and families. The authors of numerous books, including the #1 New York Times bestseller, Teaching Your Children Values, as well as others like The 5 Spiritual Solutions for Parents, and How to talk to your Child about Sex, the Eyres are the parents of nine and the grandparents of 21. They live in Park City, Utah.  For further details on setting up a “family economy,” see their new book THE ENTITLEMENT TRAP: How to Rescue Your Child with a New Family System of Choosing, Earning, and Ownership (Avery paperback original; September 2011; $18.00). 

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