Monday, March 22, 2010

Kids & Money: FPU Junior

There are a lot of people who don't think you should pay your kids to do chores around the house. The argument is that they need to do those things simply because they are members of the household. While I agree that every member of the family needs to contribute to the general upkeep of the house, I also believe that having some sort of system in place for the kids is a valuable learning opportunity for them.

That is one of the many things I like about Dave's plan is that he incorporates the whole family. Along with the traditional Total Money Makeover and Financial Peace University (FPU), he has an FPU Junior targeted toward kids ages 3-12. He also has a series of books that help teach kids about important issues and topics related to money.

FPU Junior is a system built around teaching the kid's the value of money, which I discussed briefly in my previous post. The kit includes a short audio cd with 2 versions - a lesson for parents and a lesson for kids. While Tim and I liked the adult lesson and found it very useful, we may not use the kid's lesson for a while. Because Troy (just turned 4) is a very visual kid, I think he'll do better with a book. We might try using the cd in the car some time when we need a distraction for him.

The primary focus of FPU Junior is teaching kids the relationship between work and money. Most of us grew up with the idea (whether or not we got one) that kids often receive an allowance from their parents. Dave doesn't like the word allowance. He uses the term commissions because it equates money with work (as opposed to just a given, like a travel allowance). The system is simple, you work you get paid. If you don't work, you don't get paid. He leaves the type of work and amount each job is worth open to the parent to decide. Obviously this will depend on your child's age and your family's financial position.

Dave talks about a 3 part system for kids - Spend, Save, and Give. For his kids, they were able to earn $5 a week. On pay day, they put $1 in the Give envelope and $2 each in Spend and Save envelopes. Again, as I discussed in my previous post it is important to teach kids to do all three of these things. Most have a tendency to focus on one aspect and overlook the others. The kit does include envelopes you can use with your kids for each category.

I want to highlight some of the key points and ideas he uses with this system:
* Not all chores earn you money. There are some things you are expected to do just for being a member of the family. These might include things like making your bed, cleaning up toys, helping at meal time, clearing the table, etc.
* Young kids are very visual. If you pay them in dollar bills, try wadding them up and putting them in a jar instead of stacking them in an envelope. It will have a much BIGGER impact for them this way.
* It's okay to impose fines. It works just the opposite of the commissions. The example Dave gave was a fine for talking back to adults. If you use time outs, you might assign a fine to that too. For older kids it could include bad grades or not finishing homework.
* Pay on a consistent basis. This means you don't wait weeks to pay them for work they do and you have to make an concerted effort to pay them on a regular basis. Don't let paying commissions be one of those things that slip through the cracks when they get busy.

Some additional thoughts:
* Let go of perfection. Most kids (especially the younger ones) aren't going to do a task as well as an adult will. Make sure they actually do the job before you pay them for it, but realize that it won't be perfect. I also would suggest that you wait until they aren't looking to redo it (if you feel the need to do so). "Fixing it" in front of them will make them might make them feel bad, especially if they take pride in their work.
* Be age appropriate. Many people wonder what is appropriate commissions for different ages. From other advisers I have heard the general rule of thumb - $1 per age, so a 5 year old would make up to $5 a week while a 10 year old (who should have more responsibility) would make more. I'll share what we have chosen in my next post

There are a lot of great tips and tools included in the FPU Junior kit, including a Commissions Worksheet, a Savings Goal visual, envelopes, calculator, and more. My favorite tools are the Savings Goal Sheet which provide a place for kids to see their progress and the zipper pouch with clip. The pouch is clear so kids can see the money and you can slip it on some thing so young kids won't lose it on the way to the store (yes, this has happened at our house).

In my next post I'll share how we use the commissions system at our house.

Did you grow up on an allowance? What kinds of jobs do your kids help with around the house? What tasks are expected (free of pay) as being responsible family members?

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