Allowance, Chores, Family Economy & Empowering your Kids with Money - James Ure - 485
Feb 6, 2024
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Financial expert James Ure joins the podcast to discuss how a family economy can empower children with financial responsibility. Topics include paying for chores, determining allowance amounts, teaching the importance of saving and investing, and implementing a family economy. They also mention the Greenlight app for managing finances and offer advice for high school students. Don't miss this insightful conversation!
Implementing a family economy can empower kids to become financially independent and responsible by gradually shifting the financial burden from parents to children.
Parents can utilize cash envelopes to track their children's allowances, with kids having separate envelopes for saving, charity, and spending, and gradually increasing the allowance as they grow older.
The Greenlight app is recommended as a tool to simplify the family economy system, automating allowance payments, tracking spending, saving, and charitable contributions, and guiding children towards responsible financial choices.
Deep dives
Creating a System for Financial Responsibility
Parents often struggle with teaching their children about money and financial responsibility. This podcast episode explores a system called the family economy that aims to empower kids to become financially independent and responsible. The system involves giving kids an allowance and gradually increasing it as they grow older. Kids are also responsible for paying a percentage of their expenses, such as clothing and extracurricular activities. The goal is to gradually shift the financial burden from the parents to the kids, preparing them for adulthood. Money motivation is used as an incentive to encourage kids to take on responsibility and make smart financial decisions.
Using Envelopes and Cash to Track Allowance
To implement the family economy system, parents can use cash envelopes to track their kids' allowances. Each kid has an envelope for their allowance and other envelopes for saving, charity, and spending. The amount of allowance increases with age, and kids are expected to contribute a percentage of their allowance towards savings and charity. Tracking is kept simple, with no spreadsheets or complicated systems. The system relies on the motivation of money, and parents can set up matching programs or interest rates to encourage their kids to save and invest.
Introducing Greenlight App for Financial Management
The Greenlight app is recommended as a tool to simplify the family economy system. It automates allowance payments and allows parents to track their child's spending, saving, and charitable contributions digitally. The app provides a user-friendly interface for both parents and children, making it easy to manage finances. Parents can also guide their children towards responsible financial choices, such as opening investment accounts. While the app is suggested, it is not essential, and parents can still implement the family economy system using traditional cash envelopes.
Teaching Financial Responsibility to Kids Through an Allowance System
The podcast episode discusses a method for teaching financial responsibility to kids through an allowance system. The host shares their personal experience of giving their children a weekly allowance which they can use for their expenses. A portion of the allowance is based on a percentage system, where the children contribute a percentage towards their purchases. The goal is to help them understand the value of money by having them contribute towards their expenses at different levels based on their age. The speaker also mentions the use of a mobile banking app called Greenlight, which automates the allowance process and helps children manage their spending, savings, and investments. The system allows parents to instill financial responsibility and independence in their children.
Incorporating Financial Incentives for Physical Activity
The podcast episode explores the concept of using financial incentives to encourage physical activity in children. The host shares examples of how they motivate their children to engage in physical activities by tying them to financial rewards. For instance, the speaker offered their child a monetary reward for each lap run during a school activity, which not only incentivized physical exercise but also imparted a sense of ownership as the child contributed financially towards a desired item. The speaker emphasizes the importance of creating an economy within the household, linking certain activities to financial benefits, and automating the process to alleviate the burden on parents. The aim is to foster a sense of responsibility and motivation for physical well-being in children.
Helping children learn to be financially responsible is one of the most important jobs that parents have. James Ure joins Jayson to talk about how a family economy can help you give your child the best chance to achieve success and independence when they leave home. Should you pay your child for chores? How much of an allowance should you give your child? What is the difference between bribery and empowerment? How can you teach your child the importance of saving, investing, and giving to charity? You won’t want to miss this insightful conversation.
