Parenting book #2! I’m on a roll.

First off, I thought this book was great. It felt very balanced to me in two ways:

It didn’t take the viewpoint that money was evil. If anything, it was pro money. I think that’s good! But it was also very aware of the possible downsides of how money can affect kids negatively, especially at a young age (obviously, given the title of the book).
It had lots of high-level philosophical points to make, but it made sure to intersperse these with concrete practical suggestions, like what type of tupperwares are best for piggybanks (transparent! Kids want to see all the money they’ve saved).

What’s the main idea?

If I tried to summarize the book with one idea, it’s this:

give kids real responsibility; and try to do it earlier than you think you should.

By real, I mean responsibilities that actually help the family, not articifically constructed ones that are designed just to “teach having responsibility”. One thing that I’ve been doing recently (somewhat successfully) is having Noah and Eli clean up the dinner table after dinner. This is legitamately helpful. I can stand at the sink and do dishes while they clear the table and bring me things to clean. Another one that seems to be working is unstacking the dishwasher (luckily, most of our dishes go into low drawers).

The author acknowledges the (very real) point that: in the short term it’s often faster to not have your kids help. They’re slow! They’re not good at doing the job you give them! But this is short term thinking (for you and for your kids). It’s worth it for both of you to let them practice real skills.

So, that’s my meta takeaway: If you want your kids not to be spoiled, ask them to contribute by giving them actual responsibilities. Kinda makes a lot of sense.

Practical advice: Allowance

People mainly fall into 3 camps:

No allowance. The author is pretty against this advice. The way he sees it, being financially responsible is an exceptionally important skill later in life so, why wouldn’t you let your kids practice while they are young (while the stakes are very low) like every other important skill?
Allowance in exchange for chores. The author is receptive to this viewpoint, but lands against it. He thinks both allowance and chores are good ideas, but they shouldn’t be connected. Chores are required becuase you’re part of the family and everyone has to chip in (and your kids are no different). Allowance is to teach financial responsibility.
Allowance no strings attached. This is the author’s preference. As I said above, he views is as a mechanism to teach a really important life skill (being financially responsible) and so treats it as “it’s own thing”.

When should you start giving alloance and how much?

When? 1st grade at the latest (oops, we’re already passed that)
How much? \$0.50 - \$1.00 per week for each year of age under the age of 10 (so an 8 year old would get somewhere between \$4 and \$8 per week).

This strikes me as pretty reasonable. Not a lot of money – especially split between the 3 jars (explained in the next section) – but the fact that it comes every week means kids will actually accrue a meaningful amount with time and patience.

The “give”, “save”, and “spend” jars

The author recomments getting three large transparent jars (those tupperwares for cereal work well) for each child. Each week, the allowance is split evently between the three jars.

give jar: This is to give away (charity). For young kids, he recommends finding charities that will let the kids personally hand over the money to them so it’s not so abstract and they can see the appreciation on the face of the recipient.
save jar: This is for saving up for bigger longer-term purchases. It teaches saving (obviously) and more generally it’s good practice for longer-term thinking. You want to incentivize saving and teach the important lesson that savings grow by themselves - so pay interest on savings! Different families come up with different ways to make interest both big enough that kids will notice them but not so big as to bankrupt the parents. 25% interest per month is totally fine when kids have \$10 in the save jar, but not so amazing when that \$10 turns into \$10K. So maybe some sort of tiered scheme (25% per month for amounts under \$100, less for amounts over \$100).
spend jar: This is for impulse spending on whatever they want. It’s important for parents to really let the kids spend this money on anything within reason (even things the parents deem “unwise purchases”).

Make it tangible

The point of using transparent tupperwares instead of opaque piggy banks is to make the money in these jars (especially the giving and saving jars) very tangible. Young kids don’t do well with abstraction. They want to see the money.

Along similar veins, make a routine around paying allowance each week. Pay it in cash (obviously) and make sure you have the cash handy at the same time each week.

Now that the kids have some money, what should they be required to pay for? Wants vs. needs

The author devoted a decent amount of time to the idea of “wants vs. needs”. The point is, some purchases are needs: food, basic clothing, a car (for many families). Other things are wants: designer jeans, toys, video games, vacations, etc.

The idea the author puts forward is that parents should pay for all the “needs” of their kids. But, assuming you pay them allowance, kids can pay for their own “wants”.

As a concrete example: if one of the author’s daughters wants to buy an expensive pair of jeans, he might say: A totally reasonable pair of jeans from a “normal” clothing store would cost X, these jeans cost X+100, so you need to contribute \$100.

Charity

The “give jar” is one way to introduce the idea of charity but many families also do more substantial charitable giving, especially around the end of the year. The author suggests you include your kids in this activity.

Here’s one idea I like: Set aside some dollar amount per kid (maybe \$200, but whatever you think is reasonable) and say it’s completely up to them to decide what to donate that money to. Give them a list of charities as suggestions for them to research but let them do their own research as well (clearly this only makes sense at a certain age). This is yet another example of giving kids real responsibility (this money matters to who you give it to!) and will also force them to engage with the question of “who should you give to” in a much more real way than if they were just “giving input” (but kind of know it’s the parent’s decision in the end). In this case (unlike the spend jar), it’s OK for parents to have some say in what the kids end up choosing.

Quotes from the book

Page 10. Spoiled children tend to have four primary things in common but they don’t all have to be present at once: They have few chores or other responsibilities, there aren’t many rules that govern their behavior or schedules, parents and others lavish them with time and assistance, adn they have a lot of material possessions.

Page 14. And running through all these conversations is a desire for kids to have perspective - to know why they may have more than most people in the world but will probably never have more than every one of their peers. And why there’s no shame in having more or having less, as long as your’e grateful for what you have, share it generously with others, and spend it wisely on the things that make you happiest.

Page 21. Every other Jewish mother in Brooklyn would ask her child after school: “So did you learn anything today?” But not my mother. “Izzy,” she would say, “did you ask a good question today?” That difference - asking good questions - made me become a scientist.

Page 22. (in response to hard questions) I’ve determined there is one answer that works best for any and every money question. The response itself is a question: Why do you ask?