Wednesday, June 13, 2007

What do your kids think they'll earn?

On Money and Credit, I wrote about a recent survey recently released by Charles Schwab called "Teens and Money", a poll of 1,000 Amercians aged 13 to 18 from a variety of backgrounds, which found that 73% believed they would earn "plenty of money' when they were adults.

Liz Pulliam Weston had an article today talking about this report, a very good article I might add. It's called "Why your kids expect to be rich".

In the article, Liz suggests 3 things that parents can do:

Talk with your kids about their career aspirations. Once they get beyond the "I want to be a ballerina-veterinarian-astronaut" stage, you can start having real conversations about their interests and what jobs might suit them. Research together what those jobs actually pay, advised Kristine Dixon, Schwab's director of consumer education. You can get average hourly earnings for different professions from the U.S. Department of Labor's National Compensation Survey (this is a .pdf file; data for specific jobs start on Page 7) or see typical salaries across the country with Salary.com's Salary Wizard. Contrast that with what people typically spend on shelter, food, transportation and other living expenses in your area. (If you're comfortable revealing details of your family's finances, you can show them what you spend.)
Give your kids some hands-on experience with money. If your children's only money skill is knowing how to successfully nag you into buying something, they will be woefully unprepared for the real world -- either that, or you'll still be supporting them when they're 50. Better to start turning chunks of cash over to them now, either in the form of an allowance or in payment for work around the house, and let them make decisions on how to spend it. As one poster on the Your Money message board put it, "Let them learn when a lesson is cheap." By the time they're in high school, they should be assuming more responsibility for their own living expenses, as I wrote in "Why allowances don't work."
Adjust your own attitudes about money. Recognize that even if you do win that raise, or that lottery jackpot, you'd adjust pretty quickly to the improvement in your circumstances and would soon want even more. That's not to say you shouldn't be ambitious or want to improve your family's financial circumstances -- far from it. But expecting money to be the magic-ticket solution to all your problems is just as unrealistic for you as it is for your teenager.

3 comments:

Rad said...

I think this is a great post. Not exactly sure I agree with the allowances post. If used as a savings tool it can be a great helper in teaching kids financial responsibility. Good to see a fellow dad out here in the blogosphere. Keep up the good work man.

Colonel Cash said...
This comment has been removed by the author.
Colonel Cash said...

Thanks for leaving your comment Rad! I too think that an allowance has merit to help children understand money, saving, and responsibility. Stop by again, and take care!