A few weeks ago, I asked readers to share tips for teaching children about money. As usual, you responded with some excellent suggestions.
A reader named Don sent me an e-mail to say that, excluding chores his children do "just because," he and his wife have identified household tasks for which they pay their kids on commission.
"If they do the work, they get paid," Don wrote. "If they don't, they don't get paid. Sounds like real life."
Don's children also use financial guru Dave Ramsey's 40-40-20 plan.
"They have to save 40 percent of anything they earn from any source," Don wrote. "They can't spend any of this money without approval from mom and dad. They get to spend 40 percent. Obviously this would not include tattoos or body piercing, but it is better for kids to make a few mistakes on spending choices when they are younger and spending less than when they are older and have more money to be stupid with.
"Twenty percent is for giving. With our kids already paying tithing, the extra 10 percent must be spent on others than themselves. This is a great lesson since they have to be proactive in deciding where to contribute this money."
Based on what Don wrote, these efforts appear to be working.
"When one of my daughters was 11 she saved up enough money to pay for a trip to Hawaii. . . . When my son was 14 he paid for a trip to Mexico. My then 17-year-old is the best story. She paid cash for a car (older than her, but it worked fine), toured Europe for a month and paid for her first year of college!
"Life is nice when your kids know how to handle money."
Well said, Don, and thanks for the ideas!
A reader named Janis e-mailed me with a different plan. She wrote that she has four children. When the older two were around 8 and 10, they had jars with coins and bills for their savings, donations and spending. But the two younger children would get into those jars and mix, lose or use the money.
With four children of my own, I can all too easily imagine the whining and blaming and crying that followed. But I like how Janis dealt with the situation.
"I decided to buy some basic ledger books from the office supply store, the ones with four columns," Janis wrote. "After entering the date and description of how the income was earned, I would enter the total amount earned in the first column. The second column was the amount that would be a donation, which, in our case, is 10 percent. The third column is 60 percent of the income, which was for long-range goals, such as college. The fourth column was the balance, 30 percent, for the child to use however they wished. . . . As the children earned money, it was logged into the ledger, eliminating the need for me to constantly have lots of small cash around to divvy up into the jars."
Janis wrote that, as in Don's family, her children were paid for some chores, but not the basic ones like cleaning their rooms, doing dishes and picking up their things.
"I did pay for lawn mowing, washing down doors and baseboards, deep-cleaning of bathrooms, weeding, etc.," she wrote. "I had a set amount I would pay for these types of chores and a list of others that they could choose from if they needed to earn more money for something they wanted more quickly."
At the end of the year, Janis wrote, she would total the money in each column.
"The second column for donations was given to them in a check from me written to the donatee," she wrote. "The savings column was put into a certificate of deposit in a bank that had a children's program that allowed $100 deposits. As they got older and earned money quicker, every time the balance in the savings column had reached another $100, it was deposited in another CD. During the year, the third column could add up, and when they wanted to purchase something, they would reverse it out of their ledger.
"As time went on, it was great for the children to see what they did to make their money grow, and what they spent their 30 percent on. Having only 30 percent left after they earned money helped them make better decisions, which prepares them for adulthood."
The result, Janis wrote, is that her children have become "amazing savers." For example, her third child, who is 14, already has $1,200 in CDs earning 4.5 percent interest.
That really is amazing!
Thanks to Don and Janis for sharing the secrets of their success. If you would like to pass along something that worked with your children — or if you have a financial question — please send it by e-mail to gkratz@desnews.com or by regular mail to the Deseret Morning News, P.O. Box 1257, Salt Lake City, UT 84110.
E-mail: gkratz@desnews.com