CircuitGuy

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  1. CircuitGuy

    Financial Education for Children

    I liked the ideas in this two-year-old post. The way I see it, as parents we are responsible for providing for our kids the things they cannot provide themselves, at roughly the same lifestyle we maintain. So when they're babies, we were responsible for providing their formula and diapers. As they got to be toddlers, they still needed everything provided, but sometimes they could go beyond their developmental stage and do something for themselves. At that age it might be putting clothes down the chute or quietly entertaining without an electronic device while we did something else. If they didn't step up and do it, we would have to do it ourselves or pay someone $10 per hour. So we would pay them $10 and hour. Now that they're 7 and 9, they no longer get paid for basic things like putting away stuff they got out. But if they step up and do something like vacuuming, cleaning out the car, shoveling the walk, they get their $10/hr. We try to be easy about finding paid assignments for them around the house. Then whenever they want something beyond what we consider the basics, e.g. a new video game, they can just use their money. We let them blow their money if they want. We encourage them save some in the bank and give some to humanitarian causes. Someone posted that this will be disheartening to them because they cannot save significant money. We pay $10 and hour and will pay more. That's not much more than some older kids make. And it's theirs to do with as they please. To that commenter's point, their money is insignificant to the money we're saving in 529 and wealth we hope to bequeath to them hopefully far in the future. But this is trying to teach them the value of money: They want a toy, and someone took time away from his kids to work in the factory that made it in exchange for money. They have to take some time out of what they want to do working to earn the money to buy it. When they beg for some $5 item in the store, "Can we get it? Can we get it!?" Of course they can get anything they want. That item costs 30 minutes of work. Maybe they can find it cheaper elsewhere. Or maybe they want that thing more than they want 30 minutes of rest from working, and in that case they should have it. I've told them there's really no limit to what they can have, as long as they can find new ways to get other people things they want. If they ever invent something like Amazon, they could have 90 billion dollars, a staggering amount. Or they can take it easy, earn a normal amount, and still have a life better than kings in ancient times.