This is a guest post by David Palay.
The recent economic downturn taught us all a few lessons. It changed our perception of what a safe level of savings means. It hit my family pretty hard because my father is a business owner. Fortunately we escaped with only emotional wounds. But it got me thinking.
How could we use our Jewish perspective to teach young adults the benefits of fiscal responsibility?
I believe that we can impart the tenants of strategic thinking, positive attitude, and community involvement by incorporating Jewish principles into an alternative allowance system.
My parents gave a nominal weekly allowance that was not tied to task performance. Each week I got a few dollars regardless of the quality of my housework. I was traditionally punished for laziness by getting yelled at or losing privileges. Now, I am not implying that you should never yell at your kids. I am simply saying that ignoring the power of allowance is a missed parenting opportunity.
I am in favor of giving task performance allowance to children. I am also single and have no kids. I believe that my business experience will help me with this aspect of parenting. Hear me out.
We can all agree that money management skills are important. I believe that the foundation must be set as early as possible in order to get young adults to respect the medium. Children should save up for their own toys and have no limits on how they spend. This technique naturally introduces an incentive to look for deals and think strategically about long-term large purchases.
Here is how it works:
Say there are three tasks such as washing the dishes, cleaning the house, and mowing the lawn. Assume a weekly base allowance of $2 for doing nothing. Each completed task is worth $2 a week. We can then add a $2 bonus if every task is accomplished and behavior is positive. So in theory the maximum is $10 a week if the child does all the chores properly with a good attitude ($2 base + $6 tasks + $2 bonus).
Now we can talk about interest. The child has a $40 maximum monthly allowance. We can give an additional bonus to reward long-term saving. Maybe 10% of whatever is left of the $40 for that month (10%*$40 = $4). At month end allowance becomes savings and receives standard annual bank interest.
Allowance can be used to encourage tzedakah. Tzedakah can be an educational activity used to give children community perspective. Teach them about some of your favorite charities. Bring your children to local events. Give the child a list of three charities and require a minimum $5 monthly donation from allowance. The child picks the charity. The parent should also donate.
This allowance system can work as long as parents clearly set task expectations and let the children finance toy purchases. It only works if parents can resist buying toys for begging children. There must be consequences for poor money management. I realize that too much focus on money and toys could be dangerous. We are not trying to teach kids to be materialistic. As with anything parents need to understand the best way to communicate these valuable lessons to their unique children.
There are so many opportunities for powerful learning. Parents can use allowance as a way to reconnect with the community by making service a family event. Of course this system teaches lessons about money. This concept also encourages hard work and more importantly prepares kids to be deliberate and thoughtful young adults. So it isn’t really about money at all. It is about empowerment, perspective, and Judaism.
I’m just one guy with an idea. What would you do differently? Already tackled allowance in your family? Tell us about what worked for you!
David Palay is pursuing an MBA from the Carlson School of Management and has worked in operations strategy and marketing. He will be an intern for Medtronic in Strategic Sourcing this summer. He is distracted by writing and recording music with his band, Savin Hill. David is interested to see how his business experience translates to parenting and hopes that children learn quickly. He encourages readers to think critically and is open to alternative views. So share them on the site! He can also be reached at [email protected].