A while back, I talked about why we’re not paying for our daughter’s college.
To much outrage, in fact.
In that spirit, I’m going to bring up another controversial thing we’re going to do with/for our daughter when she is old enough to work her first job.
We’re not going to let her spend the money.
You can get mad – it’s really ok! – but just wait until the end of this article If you’re still mad then, so be it, but at least hear me out first.
It teaches her delayed gratification
In our society which is permeated by instant gratification everywhere, we have lost touch with the value of waiting.
In personal finance, especially, so many have lost touch with what it means to wait. Take investing, for example. Investing involves parking your money somewhere: be it in stocks, bonds, mutual funds, or whatever else – and then waiting.
Millionaires don’t become millionaires overnight. They become millionaires because they worked hard and were patient. They waited out the highs and the lows of investing their money. They didn’t panic when things got tough, they just waited, because they knew that the long-term trend was up.
Those that don’t know the power of delayed gratification pull their money out when they get scared. Or they want to buy something. Or they get bored. Millionaires don’t.
Another example of the downfalls of instant gratification is consumer debt.
Rather than waiting until they could afford something, be it a new car, a pair of shoes, a television, or any number of things, a person with consumer debt needed to be instantly gratified. All of those things could have been afforded, and would have cost a lot less in interest, had they just waited.
I’m guilty of this, as you all know, so I’m not judging. I’m just telling it like it is. And I’m telling you that I don’t want my daughter to end up that way.
So, we’re not going to let her spend the money she earns while she works in high school.
What we’ll do instead is tell her to save it.
If she can refrain from spending the money she earns at her summer job – other than on necessities like gas to get to work, etc – but instead save it, we’re going to double her money and put that in savings. Then, once she’s saved all summer, she’ll be free to spend the money she earned, while the money we gave her sits in the stock market, earning interest.
Don’t worry, we’ll make sure she has a bit of money to do things like youth group events, or other meaningful activities, but she’ll have to come and ask us for money to do so, so that she won’t be spending excessively.
We feel strongly that making our daughter realize the power of delayed gratification will benefit her greatly for the rest of her life – and that it’s well worth a few summers of tough love.
What do you think? How do you teach your children the power of delayed gratification?
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It seems to me you guys just want to control what social activities your kid does. You may be teaching delayed gratification, but when they double down, will they be able to control the urge to spend? And that is the problem, case in point, every kid coming out of college into a brand new job. It takes some time to learn how to manage money.
Yes, we do want to control her social activities (because we are her parents), but I probably should have made it more clear that she is free to spend her money how she chooses, but if she chooses instead to save it, then we’ll double it. Just teaching self-control :-)
[email protected] says
Since my son is three he has had a small allowance. We always let him spend it as he wants. He bought a couple junky things at first, but since has just put the money in a savings account. He’s only 13 so he hasn’t had a real job, just the allowance and some side jobs like mowing lawns. The hope is that he may make a couple financial mistakes when he is younger, but once he is an adult he has most things figured out.
Definitely interesting! We have thought about doing something like this with an allowance, but I worry about how it will work. I’ll have to keep this in mind!
[email protected] says
The idea of saving the money she makes in high school and doubling is actually a great idea and will definitely educate her on how to save money and spend money responsibly. I never thought about that idea, so I’m definitely keeping that in mind when I have children.
It’s not set in stone yet, but we’re definitely thinking about it!
Abigail @ipickuppennies says
Thank you! I’ve been telling this to people for years.
My parents accidentally set up a bank account that was protected. I couldn’t withdraw money without one of them present. Which means I couldn’t spend my whole paycheck.
I was given I think $40 to play with every two weeks. Everything else? Bank account. Half of holiday and birthday money? Bank account. Same with back when I babysat.
I was taught to bring my lunches to work (though I’d occasionally splurge on one in the mall).
Meanwhile, my friends routinely spent $5-7 on those when our pay as $5.25 an hour. Sometimes they’d come back from lunch with a CD, meaning 3-4 hours of their work was gone.
I had the benefit of the Alaska Permanent Fund Dividend each year for 12 years, but thousands of the amount in my bank account were there simply because I couldn’t fritter away money like the rest of my friends.
Exactly! I think sometimes that the kids of the strictest parents turned out the best! Say what you will about giving them their freedom, I think there’s something to be said for parents being PARENTS :-)
I think a far wiser choice would be to make her set up a budget and FOLLOW IT.
There is parenting, and there is controlling or trying to control every single move your kid makes. Part of the learning experience is making mistakes.
Quite simply, when your daughter gets a job, show her how much college costs. Show her how to start saving for it by making payments to herself, make her save a certain percentage, and let the kid have some dang spending money for crying out loud. If you want to double her down, match her if she saves up for a car, or offer to pay her first year of insurance, but teenagers need to live a little too.
The way you’re talking, she is not learning work ethic, why would a kid want to work ONLY to see a fat savings account balance? What if she doesn’t WANT to work?
Maybe a good ideas – but what expenses will she really have? I like the idea of a budget, but you have to have expenses for a budget. And, unfortunately, you can’t teach a kid to want to work. I wish it was that easy…. But just to be clear, I don’t want to control what she spends. She is free to spend if it she chooses, but we won’t double her money then :-)
Rachel G says
My parents told all 7 of us kids from early on that they wouldn’t be paying for our college educations–with the result that I graduated from college debt-free, with no financial help from them, and two of my siblings are in their junior year, debt-free, without financial help from parents. Preparing kids ahead of time for that eventuality works. But my parents found no need for any complicated schemes or rewards associated with the money we made in high school–in my memory, they didn’t tell any of us how to spend it, but with college looming ahead, all of us made good, balanced choices as far as spending on things that were important to us, and not spending frivolously. Obviously, it worked! Now, my next sister is turning 18 this month, and is going to be a freshman in college this fall. She’s been a nanny for the last three years, and is, I believe, well-prepared for a good start in life. In my opinion, if you teach kids right ways of thinking about money and the future, there’s really no need for specific rules, most of us should be smart enough to figure it out ourselves, and to ask questions when we need advice. But, you know your daughter, and if she works better within set guidelines, then that will be best for your family.
That’s exactly what my parents told me – and I think I turned out better for it. You may be right that we don’t need complicated shemes, but how do we instill good values in our daughter? I’m totally open to suggestions :-)
Way to stir the pot, Gretchen! I think that teaching a high schooler to carefully manage money, and to understand the value of hard work and compound interest is great. I personally don’t plan on being so restrictive, but I also want to point out that there’s a huge difference in a 14 year old high-schooler’s grasp on money management, and an 18 year old’s. The 18 year old had better show more maturity in this area. I still remember what I bought with my first “real” paycheck. It was a killer REI hiking backpack that I still own. Come to think of it, I never had a problem with managing money well, but a couple of my brothers needed remedial lessons. So really, I think each kid will probably need a slightly different route. I can already pinpoint that my 9 year old is going to need far less restrictions in the future than my 7 year old, who will probably be first in line at the payday lender without some careful instruction :)
I think you’ve hit on something very important: we can plan all we want, but every child is different :-) I don’t want to be restrictive, but I do want to give her awesome incentives to learn some good habits like investing, self-discipline, and delayed gratification.
Jayleen @ How Do The Jones Do It says
I’m wondering how old your daughter is? My daughter would probably jump at the chance of her money being doubled. My son, probably not. We give them each $50/month allowance and they have certain things they are responsible for with that money. Hair cuts, Birthday gifts, etc. I don’t tell them how to spend it and we hope they make lots of mistakes while they are under our roof. My son loves to sell stuff on eBay to earn extra money and has become more careful with what he spends on. He’s even pretty picky about which Birthday parties he goes to. It can be both hard and interesting to watch but I see him learning a lot his own way. Our daughter is a saver but will spend on things that are special to her like books and shower gels;0)
We told my 16 year old that we would pay for half of his first car. When he turns 16 he got a job at a restaurant down the street. He made minimum wage and tips. We used his tips for spending money and saved her paychecks. We purchased a car in January – he contributed about $1700.
We also make him contribute to his bills. he pays $10 for his phone and $20 for his car insurance on the 1st of every month to us. This way he has to plan how he spends his money all month so that he can pay his monthly bills on the 1st. I hope (and think) that this is helping him with real life money situations.