The fact that I ever taught personal finance to high school students is ironic given how miserable my own financial skills were when I was a young adult. I knew the barest of bones about balancing a checking account and avoiding overdrafts, but I never had much reason to practice them because as a high-schooler myself I had my mom to act as a safety net and only ever had as much discretionary income as my previously cashed paycheck yielded straight into my wallet. Then, as a college student my student loans provided enough cushion after what my father contributed to tuition, my mother contributed to housing costs, and what I earned at my various jobs that I never had to pay much attention. Thus, one of my first acts as a newly graduated 22 year old moving across the country to the most expensive city I could find, New York City, was to break my bank account so thoroughly that I had to borrow money from an uncle to make rent. It was after that humiliation, and the 10 months it took me to peck away at paying back such a quickly-incurred debt, that I finally began learning how to actively manage my own money.
But, even as I began educating myself about personal finance and investing, I did so with a lot of support from the generous men in my life. For starters, SLB, now my husband, greatly subsidized my portion of our NYC rent with his own student loan money. As our relationship deepened and became permanent and his earning power increased while mine stagnated and eventually disappeared (Hello, SAHM-dom!), it came about that I still rely on his financial support to this day. Then there was my uncle and his emergency rent bail-out, my stepfather (whose wise and responsible financial planning greatly benefitted my mom and me) and his support during my first stint in graduate school, and my grandfather who bequeathed me enough money after his death that I was able to pay off my undergrad student loans with it. While I am grateful to these men for their generosity, compassion, love, and, yes, financial support, I also realize that I am lucky to have had them.
It rankles, however, as a feminist, to know that so much of my comfort and successes have come from the patronage of the men in my life. I know that such dissonance comes only with great privilege (After all, how many people have the wonderful fortune to be able to feel philosophically, you know, icky about free money?), but it exists nonetheless. I am both a vocal feminist who believes that women can and should learn to harness their own earning potential and financial power and a woman who, in practice, is not doing that. It’s an uncomfortable line to walk, but I find relief in knowing that I can earn, manage, and invest money when necessary. I have the skills now, even though my current work is largely monetarily uncompensated. I didn’t then, when I needed them, but I do now. I have to take my comfort in that and in making sure that my own daughters have the fiscal knowledge as young women that I didn’t. I don’t want my girls to have to depend as much as I have on the generosity of their relatives and partners – and their own luck in having kind and solvent loved ones – to manage their money. So, I’m starting early with their own financial education and lessons in personal finance. I want them to practice at 6 (and begin to see in action at 3) what I had to learn the basics of at 22. I was lucky and learned how to be competent. I want them to achieve the latter without having to hope for the former.
Thus, we are beginning our financial literacy lessons early and often in our household. Our older daughter, Livy, has had an allowance of $1 per week for the past year, and we kept it loosely tied to a chore chart listing 3-4 different tasks she could do regularly without help. Having read Alfie Kohn’s Punished by Rewards and Ron Lieber’s The Opposite of Spoiled in the past year, however, I decided that we should disassociate Olivia’s weekly allowance from the work she completes to contribute to the general upkeep of the house and for the general benefit of her family. I want her to be intrinsically motivated to perform household tasks (Yes, I am a dreamer.), and I had always felt uncomfortable with paying her to do things she’d eventually never get paid to do again (get dressed, make her bed, etc.). I much prefer Lieber’s suggestion that, if children are to be paid for performing household tasks, then they should be entrepreneurially suggested by the child, who then must negotiate whether and for how much a task can be completed for payment. This way the child learns how to identify problems to solve and to actively engage in finding opportunities to earn money. Besides, what if Olivia fails to perform her chores? Do I really want sickness, obstinance, dulled motivation due to extrinsic stimuli, or any other reason to keep her from learning about money? Because, as Lieber asks, if the purpose of an allowance is to teach my child how money works, why would I make her acquisition of money with which to learn conditional? She’s going to learn how to function within various systems dependent upon extrinsic motivation and reward (School! Jobs!) just fine without the possibility of me compromising her financial education to teach her. The purpose of her allowance, as I see it, is to teach her about money, plain and simple.
So, in lieu of her previous chore chart and conditional $1.00, we have changed our system of allowance this summer. Instead of receiving $1.00 a week for performing her chores, Olivia now receives $3.00 a week irrespective of (though concurrent with – she really is a conscientious kid who likes being helpful) doing her chores. Those $3.00 are intended to be put into at least 2 of 3 jars marked “Save,” “Spend,” and “Give.”
Olivia personalized the jars with washi tape and stickers, as you can see, and I wrote the guidelines for each jar’s use on a sticker on the back of the jar.
Her Save Jar is for money intended for a big goal, such as her college fund, or, if that’s fully funded to the tune of 4 years of in-state public school tuition when she’s 16, her first car. She is required to contribute $1.00 of her weekly allowance to her Save Jar, and for every $20.00 she saves, I will give her an additional $5.00. At some point we’ll transfer this money to a savings account at the bank, but for now actually seeing the money grow in the clear glass jar is a helpful lesson in saving unmuddled by the abstraction of money in the bank.
Oivia’s Give Jar contains money she will contribute to charity once or twice a year as it accumulates. We’ve been talking a lot about charitable organizations and charitable giving this summer, and we’ve been engaging in concrete, practical forms of charity in the past few weeks. Together, Olivia, my younger daughter, and I drove around town collecting baby carriers to send to Syrian refugees in Europe, which also wound up being a great lesson in geography (How far are the refugees traveling?), geopolitical conflict (Why are they fleeing their country?), and weights and measures (What size box should we put them in? How much does it weigh? How much will it cost to ship?), as well as in charity, community organizing, and cooperation. Similarly, we took the family change jar and emptied it to pay for this year’s school supplies, with the understanding that any extra money left over was to purchase supplies for a teacher friend’s classroom in an underserved school. Olivia and I worked hard to maximize our money and buy as many much-needed, high-quality art supplies (her choices: large white construction paper, a class set of Crayola markers, a class set of scissors) as we could within our change-jar-budget. We are also bringing food and supplies to striking Seattle Public School teachers, and we just sponsored a child through Save the Children.
Those are all mom-driven projects, though, and it will be up to Olivia to choose the charity to which she wants to send her money. So far her suggestions are the Woodland Park Zoo, The Pacific Science Center, or “a place that helps girls do science.” She has also recently expressed interest in donating to the Seattle Children’s Hospital, where she will have her tonsils and adenoids out next month and where I was hospitalized in the NICU as a preemie 37 long years ago. When it comes time to send the money we’ll have a good discussion of which charities are deserving and responsible with money. Together we’ll check out Charity Navigator, Charity Watch, , and the Better Business Bureau Wise Giving Alliance to see how different organizations are ranked before writing a check.
The rule of the Give Jar requires that she put $1.00 a week into it.
Finally, on to the most obvious jar of all, the Spend Jar. This is exactly what it sounds like: a jar dedicated to Olivia’s spending money. She can put the third dollar of her allowance in this jar, or she can put it in her Give or Save Jars. She has grand plans each week of saving that dollar, but so far it has always gone into her Spend Jar. As far as her spending money goes, she can spend the money in this jar, as well as whatever gifted money she receives for birthdays or holidays, on pretty much whatever she wants. It kills me to watch her spend her money quickly and easily on things I know that are destined almost immediately for an early grave under her bed or in a trash can, but she needs to make bad decisions as well as good ones in order to learn from both. Occasionally I’ll veto a decision if it’s patently absurd (No, we don’t need baby toys just because they have your favorite licensed characters on them.), but for the most part her money is her money, and when she moves her money from her jar to her wallet and brings it with us for a shopping excursion, I budget extra time for browsing toys and extra patience for biting my tongue.
Now, all of this takes more planning, oversight, and teaching than a simple system of handing over a buck a week. I have an obscene-looking brick of $1.00 bills squirrelled away for weekly payments, and we have made a weekly habit of sitting down together to put the bills in the proper jars. But, really, although it is more complicated than our previous system, it is only marginally so. It is my hope than any extra effort on my part now in implementing an educational allowance system will reap great rewards for my girls later when they are financially literate and fiscally savvy young women.
And that, friends, is this thing I’m doing. It’s a new system, and Olivia is still delighted by its novelty. I will report back in future months on whether it works, how well it works, and if it’s teaching my 6 year old more about money than I knew as a 22 year old.