Rockin’ Robin and Juicy Fruit July 26, 2008
Posted by Tracy Gullett in Responsibility, Saving, Spending.add a comment
We’ve all seen kids – maybe even our own – who just don’t appreciate the things they’re given or respect other people’s “stuff.” When she gets off a bicycle and just drops it to the concrete, or he can’t get to level 6 of a video game and throws the Nintendo DS across the room… I can almost guarantee that these aren’t items that the kid paid for with money they earned. They might have been gifts, hand-me-downs, or they may not even be their own property. Our initial reaction (I’ve been guilty of this) may be to ask “Do you know how much that thing COSTS?” Well, no, they don’t. It didn’t cost them anything! If that one breaks, they’ll just get a new one, right?
Separating gifts from earnings is very important. If we consistently buy our kids the things they want, it makes the “real” gifts (birthdays, holidays, etc.) less special. And if gift items are special, it’s more likely that they’ll be treated with the same level of respect that earned items are. Besides necessities, we limit the things that we buy for our kids just because they want it.
Our 9-year-old has been asking for a guitar for a couple of years. When we started the checklist and envelope systems, she knew right away what her first savings goal would be – an electric guitar. She wrote it right on the front of her Saving envelope. Every week, she would put half of the money she earned into the envelope and count up the balance. We had taken a trip to a guitar studio to get some ideas, so she had a rough idea of how much the guitar would cost. It took her 8 months to gather enough cash – long enough that we felt confident that it was something she really wanted because her enthusiasm hadn’t waned. After a trip to another guitar store, she was all set. She knew the guitar she wanted. She’d held it in her hands and plucked the strings a little – having no idea how to play it. This was it.
“Dad, can I buy it today?”
“Do you have your cash?”
“No.”
“Well, then there’s your answer.”
I could almost feel the knot in her stomach – the knot you get when the thing you want is right in front of you and you can’t reach it. We’d have to come back another time. And we did so about a week later. She brought her cash and was on a mission. She got the guitar, an amp, a tuner, a cord, and a beginner guitar book. The kid could not have been more proud of what she’d gotten – what she’d earned. She wanted to play that thing all the time. She wanted to sign up for private lessons (Mom and Dad are paying for these – we’re not complete tyrants.) And she’s been practicing diligently and improving much quicker than I imagined someone with those little bitty hands could. What once sounded like “bing… bing, bing, bing, TWANG!” has evolved into a nice little melody to which I can whistle, hum, or even sing along. “Rockin’ Robin – tweet! tweet! tweet! – Rockin’ Robin – tweet! tweedle-e-deet!” I believe that if it weren’t for those 8 months of planning and saving – if we had just bought her a guitar when she asked for it – the frustration of “bing, bing, bing” would have overtaken the enthusiasm and we would have a 6-string dust collector that would end up on our upcoming garage sale.
The appreciation of earned stuff vs. stuff that is handed to a kid isn’t just limited to big-ticket items or long-term goals. Even the most simple things can be very rewarding – especially for the littler folks. I got home from work the other day, pulled into the garage, and walked in the door to find our 5-year-old, M, right in front of me. She was practically jumping up and down, she was so excited. My wife had taken the girls on a mundane trip to the drug store to pick up a few things. M had a hankerin’ for some gum, and her mom’s gum wasn’t the kind she wanted. So as they got ready to leave for the store, M grabbed her princess wallet (her version of a “spending envelope”) and clutched it close to her as they drove into town.
Scanning the huge rack of candy and gum, she found what it was she wanted – a package of Juicy Fruit gum. She waited in line, plunked it down on the counter, and paid $1.25 in cash out of her wallet. As soon as she was back in the van and into her booster seat, she had a piece of that gum in her mouth and was chomping away. I’ll bet that was the best gum she’d ever tasted. Thus the excitement when Daddy got home. She’s very proud of those 17 sticks of chewing satisfaction. This presents another opportunity for parenting – Teaching the value of sharing with Dad. 
Parents as Financial Teachers July 23, 2008
Posted by Tracy Gullett in Education.add a comment
How many times have you thought to yourself, “I wish they would have taught me how to handle money back in school”? I’ve never heard anyone say they got a great education in personal finance from their school system. Either the schools don’t teach it, or they don’t teach it in an engaging way that sticks with the students.
Please don’t misunderstand me here – I’m not saying it is the responsibility of the schools to teach it. The best place to learn good money handling skills is at home. As parents, we absolutely must prepare the future adults in our household to earn, save, give, and spend responsibly. A very effective way to teach these skills to our youngsters is to allow them to closely observe as we handle our own money dealings. From paying the monthly bills to buying a vehicle to making charitable donations, our kids should be able to watch, ask questions, and even offer input into the financial happenings in our lives. Not only does this help prepare them for the future, but it also serves to help us keep on track. If we can’t – or don’t want to – explain to our kids why we’re doing something with our money, then we should consider whether we’re really doing a smart thing.
We also need to have discussions around borrowing and the risks associated with it. Too many young adults enter the “real world” saddled with so much debt that they can barely tread water for the first 10 or 15 years. Think about that for a minute: A person can spend a quarter or more of their prime earning years just paying off the debt they accumulated with one loan application or by establishing a pattern of borrowing. It makes my stomach turn.
Whether your kids are 5 or 15, have them sit with you the next time you make a financial decision. Talk to them about it. Explain it to them. Listen to their questions and give thoughtful answers. You may just end up talking yourself out of a bad deal, and in the process pass along a lesson to that future adult sitting next to you.
Light the Night 2008 July 19, 2008
Posted by Tracy Gullett in Giving.add a comment
Following is an e-mail I received from close friends who have been deeply involved in a charitable effort for Leukemia research and whose young son is continuing a successful battle against the disease. This entire family has put many hours and much effort into supporting the cause of the Leukemia & Lymphoma Society and we are very proud of all that they’ve done. I wanted to share this because also included in his note is a nice example of kids learning the value of giving.
Hello everyone . . .
Once again this fall we are going to be participating in the Leukemia & Lymphoma Society’s Light The Night Walk 2008.
http://www.active.com/donate/ltnShawne/Stallo2008
I have a co-worker that is an avid quilter. For the past couple of years she has quilted a quilt and we have sold raffle tickets for it. Then the night of the walk, one lucky winner’s name is drawn out of the box.
This year I am expanding this to online donations for a 3 week period. Any donations that come in, starting today and going through August 8th, I will fill out tickets and put them in the quilt box for you. Every $5 gets you 6 tickets. The quilt is king size. Check out the picture of it at the bottom of this email.
When it comes to donations to this or any other charity, no donation is too small. They all add up. Last year the evening of the walk, I witnessed something that I hadn’t expected that I would like to share.
While we were standing there enjoying the activities I had 2 young girls under the age of 8 come up to me and each of them handed me an envelope. When I asked them what was in it, they said it was money they had been saving up and wanted to give it to us for the walk, to help kids like Ryan. Talk about bringing something into perspective. . . After talking with their parents I found out that they had earned weekly commissions by doing work around the house. Before they knew about the walk, they were already been putting a percentage into a “giving” envelope. As the walk was approaching the girls were asking why we were doing it and who it helped. Once their parents explained it to them, they both decided to donate all of the money in their “giving” envelope to the Light the Night Walk.
They were so proud to take their envelopes with them that evening to the walk and give it to us. You could tell from the look in their eyes how excited they were to help out. In their eyes, they were helping Ryan and they felt great about it. Their donations mean just as much to us as anyone’s did.
Ryan continues to do well. He had his normal monthly treatment just yesterday and everything went well. He went in, they took draws and he got his chemo through his port. All of his lab work came back great.
The Leukemia & Lymphoma Society’s Light The Night Walk is a nationwide walk to help raise awareness and funds to cure leukemia, lymphoma and myeloma and improve the quality of life of patients and their families. Participants carry illuminated balloons to celebrate and commemorate lives touched by cancer.
We have decided to participate in this and help them raise money for this very important cause and I’m asking you to help by considering to make a contribution. Please use the link in this email to donate online quickly & securely. You will receive an email confirmation of your donation. We thank you in advance for your support, and really appreciate your generosity!
If you would like to join us for the walk it’s September 27, 2008 at Hyde Park in Saint Joseph, MO.
Thanks again for your continued support. Please feel free to forward this on to any friends, family members, co-workers, etc that would be interested in reading more about Ryan and learning about Ryan’s story.
Chris and Suzanne Stallo
http://www.active.com/donate/ltnShawne/Stallo2008
~ live your life from your heart – share from your heart and your story will touch and heal people’s souls ~
The Art of Negotiation (with a 9-Year-Old) July 17, 2008
Posted by Tracy Gullett in Earning, Responsibility.add a comment
We just celebrated G’s 9th birthday over the weekend. She got some cool gifts that she was really happy with and our family spent the day – the whole day – at the Worlds of Fun amusement park. The weather was perfect and Mom and Dad were sufficiently worn out by the time we made it home.
Also this weekend, G and I wrapped up our long-running negotiations regarding her job checklist. Here are the changes we’ve made and to which we’ve agreed.
- Fee-for-service – No more red Xs
- Replace “Garbage” with “Laundry”
No more red Xs: We’re moving to a fee-for-service structure for G’s checklist. She now gets paid strictly based on how many times she does each of her jobs during the week- 50 cents per check mark with a cap of $10 per week. She has been very responsible in the past about telling us when she forgot to do a job or just plain didn’t do a job, so I trust that she will continue being honest about the check marks.
As she thought out her proposal (I requested a formal proposal from her), G decided that emptying the garbage cans in the house each day was too easy to be worth 50 cents. I know, you think I’m making that up, don’t you? Those were her words – the job was too easy. She suggested that she take on partial responsibility for doing our household laundry, earning 50 cents for each day that she washed clothes. I offered a counter proposal in which she could earn 50 cents per load, thus eliminating the inevitable “it’s not fair” argument when she does four loads in one day and only sees a measly half-dollar for her effort.
I also suggested that she try out the new job before she committed to it. I believe I mentioned in an earlier post that I am banned from the laundry room in our home. I have to admit that my banishment does not altogether disappoint me – and I wanted to make sure that G didn’t have the same disdain for the job as I do. So, the week before her birthday, she continued doing her regular three jobs while also taking on a few loads of laundry for free (Hey, if you do a job for free, that will tell you for sure whether you enjoy it! Am I right, people?). She liked the new job just fine, and so with the new week, she exchanged her “garbage” job for “laundry” and the new system was in place.
Now on pay day, G presents her checklist, we count up the number of check marks, we add in the number of loads of laundry she completed each day (Mom is the judge on what constitutes completion of a load), and she is paid an amount equal to 50 cents times the number of completed jobs. I had to place the $10 cap on her commission, though, due to fear that she would go nuts with the laundry and would earn my entire paycheck as commission. The last thing we need is for the balance of financial power to swing to the younger generation while they’re still in the single-digit age range.
The next lesson in store for the girls is on the concept of “unpaid leave.” Both of them left mid-week to spend 6 days at their grandparents’ house while their checklists remain blank. I’m already anticipating their reactions when I tell them I’m only paying them for what they actually did. To do otherwise would be to take a step back toward an “allowance” rather than “commission.” I’ve honestly been agonizing over this, but I don’t see any other way to handle it within our agreements.
Maybe the next negotiation will produce some additional provisos from the other side of the table. 
Early Business Experience July 10, 2008
Posted by Tracy Gullett in Education, Responsibility.add a comment
My parents started my brother and I on a path to success at a fairly young age – I’d say somewhere around 10 years old. I’m not even sure they realized that they were doing it – They were probably just looking for ways to keep us out of trouble and to let us earn some of our own money so we’d quit taking theirs!
One opportunity we were given was the chance to raise our own livestock – specifically pigs. Luckily, we lived on a farm. Otherwise this little experiment may have caused some raised eyebrows among the neighbors. Anyway, my brother and I were each given the opportunity to buy a few pigs from my parents, take care of them as they grew, and then sell them when it was bacon time. My brother, who has always been a little more motivated than me, jumped at the chance to earn some extra coin. As I recall, he made a tidy little profit and was able to buy some cool stuff that I wasn’t able to match. Good lessons were learned by both of us. My brother learned that his hard work literally paid off. And I learned… well, that my brother’s hard work literally paid off. Raising hogs was never my cup of tea, but eventually I did do some things to earn money, including selling sweet corn at a roadside stand.
The sweet corn stand at the end of our driveway felt like my own little business enterprise. We lived along a highway that was a main traffic route for the local Maytag factory. Every weekday, after the day shift whistle blew at 3:30, the cars would head my direction. I had a large sign propped up by the mailbox that read “CORN $1.00/doz” and that was apparently enough to bring ‘em in. I had a small wagon load of corn straight out of the field, and would bag it up for my customers and collect my payments. To go beyond customer expectations, I would throw in a 13th ear of corn to make it a baker’s dozen. That phrase seemed weird to me – Why would a baker be dealing with corn?
Although I wasn’t familiar with the term at the time, this was also my first exposure to outsourcing. My dad would plant the corn in the Spring and both of my parents were usually out in the corn field picking the corn by hand and restocking my inventory as quickly as they could. I handled the front office: marketing, sales, and collections. For all their sweat and hard work, each of my parents earned a trip out to McDonald’s at the end of the season. The rest of the revenue was mine to keep. With a couple hundred bucks in my pocket, that $10 at McDonald’s was still tough to part with. All of a sudden, we were spending MY money! Even to a kid, it’s always makes you think about it a little more when you’re spending your own money.
Pigs and corn may not be the right businesses for your kids, but there are many, many other opportunities for kids to earn their own money and get a little business experience in the process. Having a garage sale? Put the kiddos out front with cookies and drinks. Even if they’re store-bought items, they can still make a decent profit if they set the price right. If your neighborhood, like mine, doesn’t have a recycling program, your kid could be the environmental entrepreneur your area needs!
Planting the seed of self-reliance through business at an early age can lead to a more secure financial life for the future adults in your life. Try some ideas and share them with us by commenting on this post. Good luck!
Savings, Giving, Spending July 8, 2008
Posted by Tracy Gullett in Giving, Saving, Spending.add a comment
Each week on “pay day,” my kids deliver their checklists to me and I pay them based on our individual agreements (base pay minus red Xs). But rather than let them go blow all their money on video games and gifts for their dad, my wife and I have them use an envelope system to divide their earnings. They have three envelopes: Saving, Giving, and Spending. We’re trying to teach them the basics of budgeting and saving towards goals.
Our 5-year-old, M, captured one of her goals last night. Ever since her big sister started looking at electric guitars, M has had her eye on a ukulele. Well, she finally took the plunge and bought a baritone ukulele with $54 from her Savings envelope. She was so proud of her purchase and couldn’t wait to get home to show her mom. Her sister taught her how to play some notes, and she wants to sign up for lessons to learn how to play like Jake Shimabukuro. It’s amazing how much enthusiasm a kid can have for something she’s wanted for a long time and paid for with her own money.
The way the pay day money is divided is based on percentages. Roughly 50% of the money goes into the Savings envelope, which may only be used to pay for established goals. Another 10% goes into the Giving envelope, which is used to give to a cause of the girls’ choice. FInally, the remaining 40% goes into the Spending envelope, out of which all “fun stuff” is bought. The girls take their money and divide it up themselves, with my help with the math if needed. It’s crucial to the training that they do this themselves. Otherwise, they don’t see where the money comes from and where it goes. My kids usually count the money in each envelope each week so that they can keep track of how fast it is growing.
Originally, we based the distribution percentages on the base pay, with Savings and Giving coming first. In other words, with M’s base pay of $5 per week, $2.50 would go to Savings, $0.50 would go to Giving, and the remainder – whatever that might be after red Xs were tallied – would go into Spending. Using this method, she would get no money for her Spending envelope if she received 8 red Xs for the week (i.e. she failed to do 8 jobs).
Well, we have revised the system just a bit by making the red Xs more proportional. Now the percentages are based on the actual pay. In the above 8-red-X scenario, M would receive $3 for the week. Applying the percentages, she would technically put $1.50 into Savings, $0.30 into Giving, and $1.20 into Spending. However, since we don’t like dealing with anything less than quarters, we may round it to $1.50/$0.25/$1.25.
Is anyone lost at this point? I hope not! Once the system is established, it’s really quite easy to follow! Pay Day has become a time that the whole family looks forward to each week and is a good bonding opportunity for Dear ol’ Dad and his little girls.
The Checklist System July 5, 2008
Posted by Tracy Gullett in Earning, Responsibility.add a comment
Our kids have been on a checklist commission system for about a year now. Each weekend after we have “pay day” for the prior week, I print a new checklist for each of them. About two-thirds of it is taken up by a picture of some sort – sometimes their choice, and sometimes mine. The bottom third is a grid with a column for each day of the week and rows for each of their three jobs.
Their checklists get hung up by the door we usually use on our way in and out of the house. Each day, as they complete each job, they check it off. At the end of the day (or the next day), Dad glances over the lists, busts out the red marker, and makes a red “X” on each job that didn’t get done. This isn’t done as punishment or as a humiliation tactic. It’s just a means of record-keeping. On pay day – typically Saturday – I go over the checklist with each of our girls, calculate their standard commission minus the value of each red “X”, and pay them out of my specially-labeled “Commission Envelope.”
This is actually an allowance-commission hybrid system. We have been setting the standard commission rate based on each kid’s age – $8 for the older one and $5 for the younger one. The red Xs have a fairly proportional value – 50 cents for the older kid and 25 cents for the younger one. For example, if G has everything checked except for three items, she loses $1.50 for the week ($0.50 x 3), resulting in commission of $6.50 for the week. I’ll write more about how the money is divided into envelopes in a future post.
Soon we are moving to a pure commission system, in which each kid will get paid only for the jobs she does. G (the soon-to-be-nine-year-old) has already submitted a proposal to me. She would like to continue with three jobs, but trade “garbage” for “laundry.” If that goes well, my wife should be pleased about that (I’m not actually allowed to do laundry in our house). G believes that cleaning out the dishwasher, doing the laundry, and taking care of the cat are each worth 50 cents per day. That gives her a potential commission of $10.50 per week, which is better than the $9.00 that she would have gotten under the hybrid system. In my counter-proposal, I suggested that laundry isn’t so much a daily chore as it is a load-by-load chore. It seems more fair to pay her 50 cents for each load she does rather than 50 cents for each day that she does at least one load.
Anyhoo, with G’s birthday coming up, I believe we are close to an agreement. This eliminates the dreaded red Xs and allows her to “bill” me for actual work. We’re getting closer to a real-world scenario, and starting to pick up some lessons on how business is conducted.
Since we treat each kid’s situation individually rather than as a competition, I think we’ll leave M (the 5 year old) on the hybrid system for now. She still needs frequent reminders to take care of her checklist, and the red Xs have not been kind to her at times. She is about to make her first major purchase out of her savings envelope – a $50 ukulele that she picked out at the guitar studio. By letting her save her own money and set her own goals (with some guidance), I can’t complain about paying 50 bucks for something that might not get much use. It’s her money, she’s saved it, and she’s saved more than enough of it to get to her first goal. The excitement of taking her savings envelope in and plunking down the cash for that ukulele will be a lesson her little brain will retain for quite a while.
Financial Responsibility Leads to Personal Responsibility July 3, 2008
Posted by Tracy Gullett in Education, Responsibility.add a comment
The most immediate goal of teaching our kids how to handle money is to make sure they don’t end up living off our retirement income with us. But if the lessons really sink in with them, they will also help strengthen their feeling of personal responsibility.
Understanding how income is earned and how spending revolves around a budget puts kids – and adults – into a mindset of accountability. This leads them away from the “Why me?” and “It’s not fair!” victim mentality, and makes them think in terms of “How can I improve my own situation?” This is a very, very important evolution in thought process that many adults have not made due to the lack of financial education in the primary and secondary school system.
Accountability leads to other desired behaviors, such as being able to stand up and accept the consequences when one has done something wrong. For example, in the age-old baseball-through-the-window scenario, a child with a solid financial education will be more likely to admit to the mistake and offer to pay for the damage, whereas a child who thinks money and property are handed out as requested may tend to do whatever is necessary to avoid getting in trouble. And the good thing about the financially responsible kid is that he will likely have the money to pay!
This being my first post, I would appreciate feedback on the content and its presentation. I look forward to your comments. There is much more to come!
Happy Independence Day, everyone!
Coming Soon! July 2, 2008
Posted by Tracy Gullett in Uncategorized.add a comment
This site will be dedicated to the sharing of ideas regarding raising kids to be financially responsible and prosperous.
