Gail Vaz-Oxlade: The Money-Wise Momterview

This Mom: What do you think is the biggest money mistake that parents of young children make?

TM: I know you’re in favour of giving kids an allowance. What’s the right amount, and should it be tied to chores?

GV: It really depends on your financial circumstances, but I like the rule of thumb of one dollar per year of age, so a seven year old would get $7 a week. I do not believe allowance should be tied to chores. Who pays you to do the dishes or make the bed in your house? Chores are a part of a familial responsibility. An allowance is to put money into childrens’ hands so they can learn to manage it. The lessons of working for money will come soon enough when kids get jobs to make more money. They won’t always be happy with their allowance! In the meantime, we should set some expectations about what the allowance is for. Teach them to save. Encourage them to share. And get them differentiating between needs and wants in planning their spending. Yup, there’s fun money too!

{I really like the idea behind the Save/Spend/Share compartments in the Moonjar Moneybox that we gave Frannie last year, but I have to admit that we certainly haven’t been consistent with it.}

GV: I think those of us who can afford it should save for our children’s education. My daughter went to university this year and it’s cost about $18,000 a year to keep her in school. I would not want her to graduate with almost $80,000 in student debt for an undergrad degree. She knows I’ve saved for her. And she knows the rules of the game: she has to pay for 1/3 of school, so she has to work during the summer to make some money. And I don’t pay for the same credit twice, so pass, or prepare to ante up to retake a credit! As far as how much to save, you should aim to put away at least as much as it takes to get the total grant money the government is offering {for Canadian RESPs} so that means a total of $2500 per year, per child, assuming you can afford that.

TM: What are some of the earliest tricks for teaching your kids about money?

GV: No tricks! A solid, well-planned and determined approach to giving them a financial education. They learn to save by setting aside 10% of their allowance. They learn to defer gratification and accumulate money for larger purchases by practising “planned spending”, which is setting aside some money each week towards a particular goal. This is the same skill that helps us plan for Christmas shopping and paying our annual insurance costs. And they learn to shop smart because we talk to them about how they are influenced as shoppers and we encourage them to comparison shop and look for ways to make their money go further.

{I love using the PBS Kids “Don’t Buy It!” website with my class, as it covers advertising tricks, buying smart, etc. in a really engaging way.}

GV: When our daughters idolize starlets, and try to measure themselves against these girls and what they wear, do and have, we run into Princess Syndrome. What most of our girls fail to get is that these starlets are making a lot of money doing the dumb crap they are doing. All that posing and bad behaviour gives them enough money to pay for those shoes, those extensions, those implants. Sadly, our girls who wish they could imitate the starlets just don’t make enough money to keep up with the Kardashians. How do we stop our girls from falling into this trap? We talk about what’s real and what isn’t. We raise them to be independent thinkers and not measure themselves by stuff they can acquire. And we encourage them to be great in real ways, not just based on the length of their lashes or the size of their breasts.

{At least I have long lashes…..}