for release August 2, 2002
Another Way
by Melodie Davis
Your Kids and Money
Who gets your nomination for Cheapskate of The Year? I heard of a man who goes to funeral dinners just to get free food. Then there's the guy who cleans and recycles dental floss. Or how about the woman who gets all of her condiments (mustard, ketchup, plus napkins) at fast food counters? All of these are real live people!
Saving money is good; being downright cheap is usually frowned upon. The management of money affects all of us, whether we have the resources of a CEO or of a pro baseball player, or the $5.00 allowance of a ten year old.
Most of us in North America have rather modest incomes to manage, and somehow it always seems like we're spending more than we make. Two recent books offer some great advice on managing money, especially in a family context.
The first, called "Capitate Your Kids" (Dr. John E. Whitcomb, Penguin 2002) might make you think they're talking about cutting off your child's head (sometimes we feel that angry with our children, such as when it comes to how they handle money). But the author is taking about capitate in the sense of a "contract" where a fixed amount of money is paid or offered for a product or service. He holds that the best way to train your kids to use money well is to give them a certain amount of money (put capital in) and expect them to use it to cover certain kinds of needs, like their clothing or spending money.
"Your children need to learn how to handle money," Whitcomb writes. "They are eager to do it. Capitation leaves you out of the conflicts that arise" over money. He started a program called "The Sink or Swim Money Program" (and in his day job he is a medical doctor), which gives concrete tools and lesson plans to work through to help teens become responsible money managers.
One aspect of his program we were able to implement when our children were beginning middle school was giving them a clothing allowance each season (back to school, and early spring). They were to buy any clothing they wanted (with parents funding the biggies like coats, shoes, or swimsuits, purchased only when really needed, not every year). This saved a lot of arguments about buying clothes and forced them to buy at the cheaper stores rather than the name brand places.
Giving your children some money to handle even at the age of 5-8 is a good prescription for avoiding a bad case of the gimme's. We all know how terrible it is to see a child throwing fits in a grocery or discount store in order to get something. (Of course they throw them for other reasons, too.) But many on-the-spot tantrums for older children can be managed if they know they will get a certain amount of money each week and if they save it, they will be able to buy the wanted item. This teaches delayed gratification.
Kids leave home after high school without much, if any, financial learning. They may enter college and get further and further in debt each year, both with student loans and credit card debt. Whitcomb says you need to think of credit cards as "expensive loans."
The author of another recently released book on managing money in the family, titled "Getting a Grip on Your Money" (by William C. Wood, Intervarsity Press, 2002) says you should think of credit cards as a checking account: just as you don't write a check if there isn't money in the account, you shouldn't use your credit card unless you have the money to pay for it. Student loans are a different kind of debt entirely, because they usually have a lower interest rate, and they are an investment in a better paying job for the long term.
Wood, a professor of economics at James Madison University, Harrisonburg, Va., helps all of us think through how to get along on less, and adds in spiritual perspectives on giving and stewardship. I found his book comforting in that he tells people not to worry about handling their money perfectly. Many people despair ever doing anything concrete to bring their finances in line because they know they won't be able to pull it off. Instead, concentrate on doing a better job of managing money, not a perfect job or even the best possible job. He quotes the old Russian proverb, "The perfect is the enemy of the good." See Wood's website, www.plainmoney.com <http://www.plainmoney.com>
There are scores of other financial help books and websites around, but these are some recent good ones that offer much practical help. For instance, one of Whitcomb's chapter titles is "Going to the Prom for a Buck." I'd love to see that happen. He encourages parents to work through a gradual series of steps with kids where they are able to have increasing responsibility in decisions using money.
How have you taught your kids to use money? Send your stories to: Melodie Davis, Another Way c/o Name\Address of YOUR newspaper; or e-mail: Melodie@mennomedia.org.
You can also visit Another Way on the Web at www.thirdway.com.
Melodie Davis is the author of seven books and has written her column since 1987. She taught feature writing and has won awards from the National Federation of Press Women, Virginia Press Women and the American Advertising Association. She and her husband have three daughters.
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