• Visiting Mom in Bend

• Feature Article: Intro to Allowances. Why some work and some don't.

• Elisabeth recommends: Millionaire Mind Intensive seminars coming up in October around the US. Now is your chance to get started on your peak experience.

Allowance Concepts:
The ins and outs of giving your child an allowance.

So I don't spend too much time in front of this computer while visiting Mom, I'm going to give you a little excerpt from my book, The Ultimate Allowance. Hope you enjoy...

The “No Allowance At All” Camp

In my experience, parents in this camp usually didn’t get an allowance when they were young. A common opinion is that if it was okay for them not to receive an allowance, then it’s okay for their child not to receive one. Several parents I have talked to who felt this way seemed almost hostile and even angry, when the subject of allowances was brought up. They want their children to have to work for their money just like they did. They view the need for an allowance through their conditioning (in other words, how they were raised to see things), so they often just do with their children as their parents did with them.

Parents who feel this way are sometimes struggling with money and personal finances themselves. They are often very emotional about the financial issues in their lives so getting them to simply talk about the concept of giving their child an allowance is often more than they can handle. If this is you, it’s okay. Just stay with me here and you’ll begin to understand.

Children who don’t get an allowance sometimes develop a good work ethic, but they learn very little about money. They also tend to think that in order to have money they must always trade their time and energy for it. These children often don’t learn how to manage, save or invest their money wisely. They can also grow up with the belief that they have to work ‘hard’ to make money, instead of learning that they can work ‘smart’ to make money. In addition, these kids can develop poor buying habits because they have little experience buying things for themselves on a regular basis.

Parents in this camp are often life-long employees or self-employed, always trading their time and energy for money. While there is nothing wrong with this lifestyle, it doesn’t teach kids the importance of developing passive income streams by investing their money in assets (business, stock market and real estate). Not giving your kids a chance, from a young age, to take care of themselves financially limits the amount of experience—positive and negative—they can have with their money. This experience, to a great extent, then limits how prepared they are to successfully handle their own finances when they leave home.

The “Doing Chores Allowance” Camp

Parents who require their kids to do chores around the house in exchange for an allowance tend to think that kids should ‘earn’ their allowance by ‘doing’ something. The only trouble with this concept is that it negates the idea that kids should participate as contributing members of the family by having certain duties and responsibilities that go along with being a family member; namely, keeping their rooms clean, helping out in the kitchen and yard, doing laundry, shopping, etc. These parents often provide a little ‘extra’ allowance for additional duties like washing the car or mowing the lawn.

The main disadvantage to this type of an allowance is that your kids may think they don’t need to do their chores if they don’t need the money. Paying kids for chores certainly doesn’t teach them that making their beds is a great habit to get into every morning. If paying kids for doing chores worked, these kids would all grow up to be great housekeepers, but so far I think the jury is still out on that one! If you have ever visited kids in college and noticed the way they keep their dorm rooms, you might understand what I mean.

The “Paying for Grades” Camp

It’s important to understand the difference between intrinsic and extrinsic rewards or motivation. Paying for grades seems like paying the child for behavior that is best for the parent, not necessarily best for the child.

For a child who is already motivated to get good grades, dangling a financial reward for better grades may not have much of an effect on behavior.

For a child who has no interest in school or getting good grades, the money may either motivate extrinsically and eventually create some intrinsic motivation, or it may cause exactly the opposite result. It may cause the child to become resentful of money in general, which can then lead to long-lasting negative financial beliefs that may affect his financial future.

The Moral: Kids learn about money from so many sources: from parents, the media, the neighbors, teachers, relatives, etc. There are benefits and disadvantages of every kind of allowance method but the only kind that really works is the kind that essentially gives kids the practice they need to learn to use it wisely.

Which allowance is that? The Ultimate Allowance, of course! More on this as weeks go by. Have a great day.

Elisabeth Donati (aka Miss E) is CEO of Creative Wealth Intl., LLC, a company devoted to empowering individuals of all ages with the tools and information they need to be responsible for themselves and the world.

She is the creator of Camp Millionaire (formerly The Money Camp) and author of the amazing Financial Parenting Book, The Ultimate Allowance, which help parents and guardians raise children who don't just survive financially, but THRIVE financially when they leave home. Parents are learning a thing or two as well.

While Elisabeth is best known for her expertise in teaching kids, teens and women about money, her passion lies in preparing others to teach her programs around the globe. Attendees leave her programs empowered with a new philosophy about what it takes to be financially happy and successful in life.

Learn more about Elisabeth and her unique programs, products and services by visiting CreativeWealthIntl.org and UltimateAllowanceBook.com.

Creative Wealth Intl., LLC
135 Chapala Street, Santa Barbara, CA 93101
Toll-free Info and Customer Service: 800-928-1932; Fax: 805-957-0125
elisabeth@UltimateAllowanceBook.com

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Please feel free to forward this issue to friends, relatives
and co-workers with children. They'll thank you.