Why Practice is the Key to Financial Success

Practice. It is what we tell our kids to do to get better at, well, anything.   It happened just last week when my son received a bottle of pennies from his “Papa.” My dad, I told him, I will show you how to roll these pennies, but just like with everything, you will need to practice to get the hang of it. The practice is the reason why I’ve started to give my kids an allowance.

This is my second attempt at giving an allowance to him. The first one I started about two years ago, and it didn’t go so well. He was still shaky with his adding skills. The coin denominations were confusing him, and I didn’t have the sticktoitiveness to keep with it regularly. So it fizzled and died. Neither he or I were dedicated enough.

When to Start?

Fast forward and my son is now even more interested in money than he was then. He has a solid handle on basic math and is comfortable with all the coins and bills that we use. The other difference is I am also more dedicated to this effort than I was when we first started.  I’m more dedicated because of the idea that my son will need practice.  He needs to practice saving, spending and handling money. We all do. And I’m in a position where I can have my son practice early.

When I sat my son down to tell him that he was going to start receiving an allowance, I asked him, “Why are you getting an allowance?”.  And he came up with a few cute answers, “because I love him,” yes, “because I want him to be happy” also yes. But he didn’t come up with practice. So I told him. “Money will be a big part of your life, for the rest of your life, and like everything you do, you need to practice to get good at it. Your allowance is a chance to practice using money”.

Note that I see his allowance as a practice in using money, by that I mean, spending, saving, and giving. I have not included the practice of earning money in his allowance.  This can be somewhat “controversial.” Do you tie allowance to chores around the house? I wrote more about this here. But in short, I think that is a bad idea.

Pay for Chores?

We do chores around the house because we are “Citizens of the House.” We all need to do our part (our children included) to keep a clean, cared for, safe environment to live. Not because we get paid to do so. The trap that an allowance for chores creates is if the child decides they are willing to forgo the pay, the chores still need to get done.  Then, you are forced to have your child do the work without compensation, or you have essential tasks around the house that go undone. And now your child has abdicated their position as a house employee with no real ramifications (you can bet they won’t give you two weeks’ notice to find new help either). Either way, the lesson of paid work is lost. 

But back to the concept of practice. I want my son to be able to get a feel for delayed gratification with his savings.  He needs to get comfortable telling a cashier that they gave him the wrong change.  I want him to experience the feeling of doing something good for someone else, just because it is the right thing to do when he gives his money to a charity or a person on the street. But I also want him to experience the feeling of a lost or stolen toy, a toy he saved or broke because he was careless.

Learning Lessons

I am not going to prevent him from being a little careless with a dollar that he decides to bring to school, only to lose it in a hole in his backpack. Just as I want him to practice the positive feelings that money can bring, I need him to experience the other emotions too. That is true practice.

Before I gave him his allowance, I took it very personally when I saw him mistreat a toy. I took it personally because I was usually the one who had shelled out the money to buy that toy. And it would be me who he would come to when it broke to request a new one. But now that feeling has decreased just a bit. While I know there will be some heartache if one of his toys that he has bought is stolen, I also know a lesson will be learned. It has already started to happen.

Making Money Connections

When my son first got his allowance, he was eager to go to the dollar store. Maximize wealth was his mindset. But after a few hours of play, the toys started to break down. He now sees the link between quality and cost. He has told me he has no interest in shopping in dollar stores anymore. Now he would instead save up to buy something that lasts, than waste his money on something poorly made. That is not a lesson I could have taught him.

Before his allowance, a trip to the dollar store, buying the same products with the same lifespan, never seemed to affect him. The toy car would break, and he would be unaffected by it. I would get frustrated and tell him about quality, but he didn’t care. But now he has made the link in his head, and I couldn’t be happier.

If you give your child an allowance, I urge you to see it as a practice lap. A chance to experience both the highs and the lows of managing money. Set some rules around what they can do, guide them, of course, but don’t prevent them from making mistakes. Avoid the pay for chores trap and let them learn the hard lessons now while they are young, and the effects are nominal. I can’t say for sure, but I believe the payoff will be worth it.

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