Father Sez

From and to parents - parental advice to our children on personal financial management and life.
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Posts Tagged ‘allowances’

Paying yourself first – my younger daughters’ views

Friday, December 12th, 2008

Way back in November 2007, I wrote that one of my goals for 2008 would be to teach my children the two most important personal finance lessons I had learnt.

These were:- 

a)    To pay ourselves first and

b)    To join or have a peer group that has pf as an agenda item. 

In February 08, I posted a review of my progress on achieving this  goal. Now that the year is drawing to a close, its time for another review. 

The easier one first - Goal (b).  

On this, I have yet to succeed. This lesson was aimed more for my two elder girls, both of whom graduated this year and have now started their careers.  

I really cannot influence the type of friends they would be making at this stage of their lives. Or the type of friends they already would have made.  So my plan was to encourage them to read the many fine PF blogs out there written by people not much older than them. Hence they should be able to relate to the lessons and guidance from these posts even though the authors may be non Malaysians. Hopefully through these blogs, they would be able to get to know some financially responsible friends   

Well, I suspect they don’t read the pf blogs as much or as often as I would want them to.  

My eldest girl, Along, the psychologist in the family, is quite withdrawn at home. She does not talk much and pretty much keeps her thoughts to herself. With her close friends, she talks excitedly and you can be forgiven if you think that she has two different personalities. My eldest brother says, she is exactly like what I was when I was her age.  

The second one, Azah, is more like her mother. She is more outspoken and talks freely about her thoughts, wishes and wants. She has talked to her friends about my blog and some of them do follow my blog. 

It is quite a challenge to figure out how my girls are reacting to this message from me.  I am sure they know that their Papa means well.  At least the both of them do read my blog (at least occassionally), so that’s a great positive.  

Goal (a) - Paying themselves first

 This lesson was to be imparted to all the children.

I think I have talked enough to my two elder girls on this. I shall, of course, continue to do so.  

The three younger children have allowances each. The boy, Abang (14) and Nana (13) receive monthly allowances. Ain (9) receives a weekly one. They all have to maintain accounts of their allowance and I review them each time they receive the next one. The first thing they have to do when they receive the money is to save 10% of it. 

I was not sure if they understood the lesson of paying themselves first. So I asked Nana and Ain if they understood why they had to save the 10% as soon as they got their allowance. They gave answers like, “so that we would not forget” and “so that we can save before the money is lost”. 

I told them a story as I had read in the Richest Man in Babylon. About how most people receive their wages or salaries and pay the shoemaker, the landlord, the dressmaker, etc., and then try to make do with what was left. Hence paying themselves last. 

I told my daughters that they should always pay themselves first, and only after paying themselves should they worry about paying the others. They nodded wisely and then went about doing whatever it was they were doing. Hmm….I have to find more stories.

I guess I can only give myself about 45% for 2008 achievement as far as this goal is concerned. I am continuing this goal into 2009 and as long as necessary. This is a very important goal for me.

Review of my younger children’s money habits

Wednesday, March 5th, 2008

boyandpiggybank.jpgIt’s been 4 months since we started giving the children a weekly allowance.  In November 07, Abang (14) and Nana (13) signed an agreement with their mother that:

a) They would keep weekly accounts of how they spend their allowances,

b) Save at least 10% of their allowances.

So far this exercise is going well. They show me their accounts book each week (the entries are neat and tidy) and I give them the next week’s allowance. The amount they note as having “transferred to piggy bank” is also noted in a separate page, so that it can be compared to their bank books later.

Bank savings accounts have been opened for all three younger children.

I have not explained to them the concept of “paying themselves first”. Though they save the money weekly, currently they are doing so just because I have told them to.

I have reviewed this process and now propose to tweak it as follows:

a) Based on advice from Lynnae in her installment of the free e-book Money Matters for all Ages, I am going to change this weekly allowance to a monthly one. Hence it becomes more like a salary. The kids will learn how to stretch this salary for a month and also learn to budget.

I am setting 1st June 08 as the target date for this.

b) They have to learn that just whining and complaining will not get them any extra money. They have to do additional chores in the house and negotiate additional payments for this. So far only Nana has earned extra money and that, too, only once.

c) They have to pay for their own special expenses like presents for their friends’ birthdays and stuff like that. I have to elaborate on the frugal ways that are available to come up with a present that is memorable and yet very light on their budget.

This Friday, their first term holidays start. It’s only for a week. Now that there is no cable TV in the house, they should have a little more time. I plan to take them out and have a chat with them on :-

- what are salaries and wages,

- how do people spend their salaries

- what happens when expenses is more than income,

- the concept of budgeting, living below our means and paying ourselves first.

d) I’ll ask the youngest girl, if she is ready for a weekly allowance. So far she has not asked for this. She still receives money daily from her mother for school.

Well, I certainly don’t expect my three musketeers to enthusiastically grasp this talk. I’ll have to take them out to a place they’ll enjoy, soften them up a bit and try. At least I get a chance to talk to them at an earlier stage in their lives than their two elder sisters.

I’ll keep you posted.

Note: The picture is from Google Images.

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