When should you start giving your child an allowance? How much is reasonable? Is it a morally reprehensible practice that turns all young ones to the Dark Side? Given the current economic crisis we, here at Dadlabs, believe that we should teach our children skills to manager their money early on in life. Invest now, reap the benefits later. DadLabs Ep. 70 The Lounge.
Daddy Clay: Welcome back to the DadLab Lounge where we’re a little depressed about money. Because I’m doing some research for a Lab segment on college savings and it’s got me a little bummed out. But it got me thinking about how do you start to teach kids about money and when should you start doing that and what’s the best way to do that?
Daddy Brad: Allowance. Give your children allowance.
Daddy Clay: No.
Daddy Brad: No?
Daddy Clay: No, it’s stupid.
Daddy Brad: Allowance is the best way…
Daddy Clay: It’s terrible
Daddy Brad: It’s the best way to teach kids about money management.
Daddy Clay: It doesn’t work.
Daddy Brad: Why not?
Daddy Clay: It doesn’t work. It’s dumb.
Daddy Brad: What are you talking about?
Daddy Clay: Okay – so, first of all, when do you start? When do you first start giving allowance?
Daddy Brad: I think you should start the moment that the child starts to understand that money is something that you give to someone and then that someone gives them something they want. So you know – three, four.
Daddy Clay: You’re going to give a four year old allowance?
Daddy Brad: Absolutely.
Daddy Clay: They’re going to eat it.
Daddy Brad: That’s okay, that’s okay…
Daddy Clay: You’re going to be cleaning their allowance out of their diaper, dude.
Daddy Brad: They’re going to understand utility.
Daddy Clay: Okay. So – so, I’m not – you start at age four?
Daddy Brad: Four….
Daddy Clay: And what do you suspect that children are going to do – so you give these children this money – and what do you suspect they are going to do with that money?
Daddy Brad: Other than eat it?
Daddy Clay: Other than eat it.
Daddy Brad: Okay, they are going to buy – they are going to ask you to buy the things that they really want. The things that they see on TV, advertising.
Daddy Clay: Exactly! They’re going to buy stuff that you won’t buy them.
Daddy Brad: Well – yep, yep…
Daddy Clay: They take that money and buy all the stuff that you don’t want them to have.
Daddy Brad: Absolutely.
Daddy Clay: Why would you enable a child to go buy five pounds of Snickers?
Daddy Brad: Uh-huh.
Daddy Clay: When what you know that what you don’t – you know that’s what you say no to.
Daddy Brad: Because they are going to understand about money and utility by their success and failures. They’re going to buy five pounds of Snickers with their allowance and they’re going to eat one and it’s great, and then they’re gonna eat two and it’s great, and then they eat three and they’re going to have a stomach ache, and they say you know, maybe I shouldn’t have spent all my money on these Snicker’s because now I have a stomach ache.
Daddy Clay: So…you sticking your finger in an electrical socket school of parenting. That’s ridiculous. You’re smart, you’re the adult, you know they should eat Snickers, you tell them no. First of all they use the money…. Second of all, so…so you
Daddy Brad: You gotta learn to swim. The only way to learn how to swim is to jump into the river.
Daddy Clay: So you’re in a situation where suddenly the child has money, you’re telling him not to spend it and they start to have a lot of money. And we ran into a situation where the child had the most cash of anybody in the house.
Daddy Brad: Happens with me all the time.
Daddy Clay: It’s dangerous –
Daddy Brad: You get to take a little bit of it, though.
Daddy Clay: I steal it, I don’t give it back.
Daddy Brad: That teaches them to be very, very careful about where they leave things laying around.
Daddy Clay: It’s not good though. What if the kid catches you, you know in there pimping a fiver because you’re a little bit light and you’ve got to pay the babysitter.
Daddy Brad: That’s gonna cost you.
Daddy Clay: And that’s not good. It’s like I have this domestic Enron thing going on in my house. I’m embezzling from my eight year old.
Daddy Brad: Yeah, that will teach them not to leave their stuff laying around. Like don’t leave your bicycle out on the front lawn because it’s going to get stolen; don’t leave your cash laying around in your room because daddy’s gonna come and snake it.
Daddy Clay: So, it’s sort of the reverse Tooth Fairy. And so, to deal with that – the other thing I thought would be a good lesson is we opened a bank account.
Daddy Brad: Oh, that’s good, that’s good.
Daddy Clay: Because he has this excess cash, so we put the money in the bank. But the problem with that is – now the kids got like two hundred bucks.
Daddy Brad: Good, good.
Daddy Clay: He’s going to buy a chainsaw with that, I mean he’s gonna buy a case of hand grenades.
Daddy Brad: You can – you can still….
Daddy Clay: He wants to buy a golf cart. He’s gonna kill himself with that money.
Daddy Brad: No, you can tell him – you can tell him….
Daddy Clay: I’ve got to hide it from him.
Daddy Brad: You can tell him what he can and can’t buy, you have to establish some ground rules.
Daddy Clay: I need to take that money. I need to take that money –.
Daddy Brad: What are you – a communist? Are you a communist?
Daddy Clay: Away from him. He can’t handle it.
Daddy Brad: Exactly, he can’t handle it…
Daddy Clay: Allowance is a bad thing.
Daddy Brad: He can’t handle it – he’s going to learn by the mishandling of money – its better that he learn how to do this at five, six, seven rather than twenty-five, six or seven. Cuz woo – you get to college, you’ve got a MasterCard, it’s time to get your snack on...
Daddy Clay: He doesn’t – I’m telling ya – he doesn’t have to worry about college.
Daddy Brad: Oh, yeah. Right, our kids aren’t going to college because it’s too expensive.
Daddy Clay: God, I’m so broke.
Daddy Brad: Yeah, you can always borrow a fiver from your boy.
