From the desk of Pam Martin, Cosmetology Department Head at Clary Sage College.
I wasn’t taught financial responsibility. My grandfather would give me an allowance (my mom could not afford to give us money) each week and take me straight to the store to spend it. I married as a teenager and soon learned the value of a dollar and what no credit gets you. These were the days when Hamburger Helper was just Helper. When our kids were young we decided to teach them to be financially responsible with their money and that Mom and Dad were not going to bail them out when they over spent.
Our kids wanted a big expensive party and a big expensive present on their birthday, so at the age of 6 we started a tradition mainly because we could not always afford to do both and we felt it should not be expected.
I’m using $100 as an example but you can fill in whatever amount you can afford or feel is appropriate.
Start with $100. You want a cake? $100 less $15 was now $85. Party favors? $85 less $15 was now $60, you get the picture. Whatever they had left over after expenses was what they could save or use buy a toy. All of which, was their choice. The kids looked forward to their birthday money and planned their parties wisely. Sometimes they would keep most of it by having a sleepover with a few friends and sometimes they blew the whole amount at Chuck E. Cheese or Miller Swim School.
When it came time to think about a learner’s permit, the kids had to earn money by babysitting, extra chores, pet sitting and such. Once they earned $500 we opened an account at the credit union and they were allowed to get their permit. The $500 served two purposes. One, it was to pay the deductible if they had an accident. Two, they took out a secured loan for $500 with a payment of about $20 each month. They had to make the payment before the due date each month. If they did not have the money on the due date, the car keys were turned in and they were riding the bus. I think only one of the kids missed one payment which set an example for all of them. The account grew to over $1000 by the time they finished high school. Now, they had established a good credit history and had some money to use towards college expenses.
They each had a cell phone that was an add – on to our account costing about $10 a month. This too was a payment that had to be made by the due date or the phone was repossessed until payment was made. Again, this happened maybe once.
I am happy to say that my now grown children are all college graduates that have great credit scores, live within their means, own their own homes, drive dependable cars and are for the most part very financially responsible; which is how we all hope the future will be for our children.