Teaching Kids Financial Responsibility Through Allowance Strategies

Teaching children about money involves instilling values of hard work, responsibility, and deferred gratification through engaging conversations and creative incentives.

### Teaching Financial Responsibility to Children: Insights on Allowance and Values
* 👶 Eric seeks advice on starting an allowance for his six-year-old to **instill a financial mindset**.
* 🏠 The speaker emphasizes that certain chores are prerequisites for living in their household, such as **unloading the dishwasher and taking out the trash**, which are **not compensated**.
* 💵 Additional responsibilities that provide value to the parents are rewarded with money, teaching children the concept of **earning through extra effort**.
* 📊 The speaker encourages discussions around money management, focusing on the three key actions: **giving, saving, and spending**, to help children understand financial decisions.
* 🧒 Personal experiences reveal that not all children respond to allowances; one child showed **little interest in money** at a young age, highlighting the need for **tailored approaches**.
* 🍽 Household chores, like washing dishes, are also part of teaching responsibility, ensuring children learn **essential life skills** before heading to college.
* 🎮 As children grow, interests may shift towards **earning their own money**, as seen with the speaker's daughter who began working at 14 to **fund her hobbies**.
* 🍦 The speaker suggests using non-monetary incentives, such as rewards for completing chores, to teach **deferred gratification and goal-setting**, reinforcing that financial education is more about **behavior than just understanding money**.

[Music] Well, this actually leads perfectly into Eric's question. May you can expound a little bit more 'cause he says, I'm planning to start an allowance for my six-year-old soon. Any advice on how to do this right and instill the financial mutant mindset in my child? But I'll let you kick off 'cause those are those kids are six-year-olds closer to you than it is to me and my children. So, what man, I'm going, I'm going to try to give good financial advice without like dipping into, Well, he has for experience. So, I'm going to, I'm going to show like mine and my wife's our thoughts on this. First, what I want you to do though is subscribe to the channel if you've not done that so that way you can hear all the parenting advice that we want to share with you. What we've decided is that there are certain things that are just like a prerequisite of getting to live in our house, right? Like as part of living here

There are certain things that you're expected to do. My one daughter has to unload the dishwasher. My other daughter has to take out the trash. They have to, you know, make their beds, clean their room, do that kind of stuff. So, I'm not so much giving an allowance for that, but what we said is, Hey, if you want to take on additional responsibility in the house that would be valuable to your mother and I, and when something is valuable to us, we're willing to pay money for that. So, we're going to exchange our dollars for a service that you can provide. So, if not only you take out the trash, but you actually will the trash can out to the street, or if you, you know, fold laundry even when it wasn't part of the chores you had to do that week, we do start to give them money for that. And then, every time we give them money, we always have a conversation around, Hey, when we get these M, when we get this money, what are the three things we can do? And then, it's just kind of

becoming rope memory for them. Now we can give, we can save, we can spend. We do all three of those things, and we walk them through how to go about making that decision because we want them to understand that there's also something tied to, Hey, if I work hard and I do a little bit more and I put in a little bit extra, then I can receive value. I can get money from that. But not just doing the bare minimum, not just doing the basics. We want them to understand that there's like a basic level of, you know, getting to live rent-free in our house that's required of you to be a contributing member of our household. Is that fair? Was that good? No, I think I think it, and I love the give-save-spend. I will tell you, because I'm always very transparent to you guys, I tried to do with my oldest an allowance. It never really took. It just because it now don't mishear me that that did. It's more on the parents and the fact

that we said, Hey, we're going to start an allowance, and she just wasn't at that time when she was younger, specifically like a six-year-old. Money just didn't do it for her. She wasn't. It just wasn't something that was connecting really. So, I think every child, as we know, as much as if you have a great child, you think that you've got this all figured out. Don't worry, you know your next one will humble you on how you the lot comes in the recipe that's already kind of cooked in. But so, it didn't take very well at that point. You know, we realized we were trying to force something that just wasn't. The aptitude or the interest wasn't there. But we still kept, I mean, my oldest. One of the things I'm pretty proud of, and I because I. It reminded me in my childhood, is that we always made her wash dishes. 'Cause, you know, we tell her it's because we want

her to be part of the whole cooking process, but also it's kind of nice when you make a meal and then you get them to clean up all the dirty dishes. It's a true dividend to being a parent. The other thing is that I think is very valuable, 'cause this is something I started doing my own laundry in middle school. Um, because unfortunately mine was not a positive experience. I got in a fight with my mom, and then she's like, Do your own laundry, and then I was stuck doing my laundry for all through middle school and high school. For my oldest, we just wanted to make sure she didn't go to college and not know how to do basic take care, so we made her through high school take do our own laundry. So that stuff didn't get an allowance, but it was when she started working, 'cause somehow, and like I said, it goes in the recipe of the child, she kind of around 14, 15 years of age started getting interested in working, earning her own money, um, and primarily 'cause she was trying to buy gifts.

cards to some of these online roblox or um what's the other one that kids build all the stuff in but she was doing all this type of creative video games online and and she needed money to do that and so we we we used that opportunity kind of talk about the whole MRA Minecraft dollar for dooll matching look at you definitely came up with but it's um but it we use that as the the the point to really have those conversations and I'm happy to say cuz now she's she's 21 years of age Crush um and she is she's a she's good with money and I'm very proud of that and I think it's just that we we met her where she needed to be met we didn't force it because I don't want you to be disappointed with your 6-year-old or your 8-year-old or your 12-year-old if they just don't seem interested that's okay they're kids you know it's probably a foreign thing to them to

think that they're going to jump out and be really into money at those ages, but you just need to keep your eyes and ears open to when you can be a good parent, have those creative and building conversations to maximize those moments. I'm just going this last little piece on because you said something for your oldest. Money was not a motivator early on. One of the things that my wife has done really good with our girls is she's figured out what they value. So she does like this little sticker chart thing or whatever. Earlier on, when they're a little bit younger, they could earn, Hey, we're going to have movie night, or We're going to get TV time, or We're going to go get ice cream. So the incentive for the allowance may not actually be dollars, but even if you can just teach them, Hey, here's what we can do if you do all your chores this week, then we're going to go get ice cream, or If you do all your chores

For all month, instead of going to get ice cream, we'll go on a weekend. Try, I don't know, you figure out what the motivation, because even in that, you can teach them deferred gratification. You can teach them towards setting a goal and working towards it, even if it's not dollars and cents. I very much believe that we can teach our kids how to be financial mutants even before we teach them how money specifically works, 'cause 90% of it is the behavior. And if you can get deferred gratification and that kind of stuff in your kids early, you're likely going to set them up for success.

How to Set Up an Allowance for Your Child the Right Way!

Bring confidence to your wealth building with simplified strategies from The Money Guy. Learn how to apply financial tactics that go beyond common sense and help you reach your money goals faster. Make your assets do the heavy lifting so you can quit worrying and start living a more fulfilled life.

Subscribe today to stay up to date with our latest episodes, livestreams, and highlight videos: https://www.youtube.com/c/MoneyGuyShow?sub_confirmation=1

Are you ready to go beyond common sense when it comes to your money? Check out all the free resources The Money Guy Show provides: https://moneyguy.com/resources/



The Money Guy Show

Starting an allowance for a six-year-old can be done by offering money for additional responsibilities at home, rather than for basic chores.

It's important to have conversations with the child about the value of money and the different ways it can be used.

This approach helps instill a financial mindset and teaches the child the importance of providing value in exchange for money.

Teaching Kids About Money and Responsibility

Parents aim to teach their children the value of giving, saving, and spending money, while emphasizing the importance of hard work and contributing to the household.

The concept of an allowance was tried but didn't resonate with the oldest child, highlighting the need for a tailored approach to each child's interests and aptitudes.

Despite the challenges, parents continue to instill responsibility through tasks like washing dishes, drawing from their own childhood experiences.

Involving children in the cooking process and having them clean up dishes is a parenting strategy.

The speaker's own experience with laundry in middle school led them to ensure their oldest child learned basic life skills before college.

The child's interest in working and earning money at a young age provided opportunities for valuable conversations about financial responsibility.

Parents should stay attentive to their children's needs and have creative conversations to maximize parenting moments.

Offering non-monetary incentives, like movie nights or ice cream, can be effective in teaching kids responsibility and the value of chores.

Understanding what children value and using incentive charts can help motivate them without focusing solely on money.

Instead of weekly ice cream trips, the plan is to go once a month, promoting deferred gratification.

This approach aims to teach kids goal-setting and working towards it, emphasizing that financial behavior is key to success.

Instilling these values early on can help raise financially responsible individuals.