If Only We Could Give Ourselves a Raise Every Year!

Today is a big day for the kids at the Reed household - Its time for a raise!  For reasons that I explain fully in the book, we give our kids a weekly allowance of $1 per year in age on January 1st (the eight year old receives $8 per week, etc.).  As with real life, the raise comes with some new responsibilities and expectations.  This year Logan, the eight year old, will learn that investments do not simply go up and up and up.  As much as I want to leave the whole investment management stuff to the experts in that arena, this is a lesson that is crucial to a solid foundation - investments lose money, sometimes a lot of it.  The challenge is making this fun and interesting to a kid who is not exactly detail oriented, and I think our way is really effective.

Speaking of effective, Miranda (age ten) learned a real life lesson over the holidays.  The kids' school sets up a holiday gift shop for the kids, and as much as I cringe opening the gifts they have selected for me each year (the chocolate scented highlighter from last year is used to this day despite its ability to jump start a vomit every time I smell it!), it provides a way for the kids to give without breaking the bank.  I am honored that they think enough of me to spend their hard earned cash on gifts for us as their parents and impressed by their generosity in giving to the other members of their family and friends.  There was, however, an incident.  Miranda spent $20 on a gift for her Aunt and Uncle.  Unfortunately, it was left at school rather than brought home, and it grew legs and walked away.

Tears ensued.  But after she calmed down a bit, there was a ton of learning:

• Not everybody is as honest as they could be.  Somebody has this gift and they did not pay for it.  Could have been an honest mistake, but maybe not.  Yes we talked about this.
  
• It is truly the thought that counts.  The Aunt and Uncle were still very appreciative that she thought of them.  No surprise here.
• Miranda was not exactly clear on the purpose of the Savings Account and the minimum balance we set up.

 I asked her if she wanted to talk about it the day after it happened. She was still pretty upset and declined.  Respecting her wishes, I let it go.  For a while.  When I circled back, I asked why she had not simply grabbed another gift?  (By the way, this conversation happened in my mobile office - the car!  Grab the opportunity to talk to them whenever and wherever you can!)  She replied that she did not have any more money.  Being her banker, I knew this was not the case.  She had money in savings for emergencies, and I certainly would consider this a situation worthy of dipping in to it.  She was under the impression that this money was never to be touched no matter what.  This exposes a critical skill that the parent/banker must possess - the ability to repeat themselves endlessly, sometimes to the point of a migraine.

Miranda's new responsibilities include some personal care stuff, as she has reached the point in life where a daily shower with whatever happens to be laying around for soap and shampoo is no longer acceptable.  Critical point here - we use what some would call an excessive amount of allowance to purchase things that we would buy anyway, and use it as a teaching tool.  We also have a technique for completely doing away with temper tantrums in the store checkout line when the kid asks for candy or some bauble that caught their eye.  That one is classified, and you need to wait for the book to learn it!