The following is an amalgamation of “family economy” stories from EO families who have implemented the family financial system laid out in Richard and Linda Eyre’s new book, The Entitlement Trap: How to rescue your child with a new family system of choosing, earning, and ownership. The Eyres can be reached at www.TheEyres.com.
My spouse and I got to thinking one day how “nuts” it was to accumulate money and wealth, but never teach our kids how to handle it or even how to have the financial savvy necessary to thrive in this topsy-turvy economic world they are growing up in.
We realized that we had an economy in our own home, but it was essentially a welfare and entitlement economy. Kids asked for money (or toys or whatever) and got them. They felt that they deserved whatever they wanted and whatever their friends had, without working or waiting. And the “allowances” they received were essentially hand-outs.
- Were we setting them up for failure?
- Was our indulgence fostering an entitlement attitude?
- Were we undermining their initiative and motivation and even their entrepreneurial spirit by giving them too much?
Then we ran across a bold claim by authors and popular EO speakers Richard and Linda Eyre, who said that we could create a little microcosm of the real economy within our own homes. Specificallt, they suggested:
- Instead of “allowance” or hand outs on Saturdays, we could have “pay days,” where the amount kids got was directly proportionate to how many of their tasks they remembered and completed and kept track of.
- Instead of an open wallet or purse, we could establish a “family bank” of a big chest with an impressive lock on it and a slot in the top where kids put a slip each day showing how many tasks they finished (signed or initialed by a parent or tender).
- Instead of cash, each child could have a checkbook with a check register to keep track of and let them deposit or withdraw from their account in the family bank (which would pay interest on the portions they elected to save).
- And instead of them living like entitled prince and princesses in their castle, there could be simple tasks they were responsible for … from cleaning a public area of the house or kitchen to having the initiative to get homework and music practice done without prodding and before dinner.
We introduced the “family economy” to our kids, explaining that they could earn much more money on this scheme than they had been getting as allowance, but that the catch was that they now had home responsibilities to keep track of and that they now would buy all their own “stuff.”
The elementary and middle school kids went for it immediately. They were flattered by the responsibility and persuaded by the adult-like recognition of having their own checkbook and account in the family bank. They loved having more money and having responsibility to buy their own stuff.
The teenagers were a little less enthusiastic, until we took them out to dinner and talked about the fact that they had only two or three years left at home before they went off to college and that this “family economy” would make them more independent and prepare them to handle their own financial affairs once they were living away from home.
The learning moments started almost immediately. I had my 9-year-old son with me on a trip to the mall, and he brought his family checkbook and almost immediately started asking, “Can I have this?” or “CanI have that?” Instead of the “no, no, no” answers of previous shopping trips, I replied, in my best banker imitation, “You can have whatever you want to buy.”
He had me hand down a toy to him and then asked a question he had never asked before, “How much is it?” I showed him the price tag and then he suddenly handed the item back to me. “Put it back, they want twenty dollars for that— they must think I’m stupid!”
Our daughter blew all of her money on a pair of $120 jeans and had no money left that weekend when her friends wanted to go to the movies. “Mom, what can I do?” Again in my non-emotional banker’s role, I said, “Sorry, I feel your pain. Maybe you better budget a bit better next week.”
The bottom line is that everything changed … and evolved. We negotiated an interest rate that the bank would pay on the part of their earnings that they saved. They made small-consequence mistakes weekly, and learned from them. The “earned ownership” that they felt for their money transferred to the things they bought with it, and they began to feel pride in things and take care of them. They negotiated with us for “matching funds” when they were saving for a bigger ticket item. They began to become financially savvy before our very eyes as we tried to make our little family economy a true macrocosm of the real world economy.
To sum up: They became more and more entrepreneurial!