Recently, while reading a section of the book titled, Young Bucks – How to Raise a Future Millionaire, by Troy Dunn, I came across a very interesting section on the ongoing debate of whether or not it is best to give your children an allowance while they are growing up. This topic will be subject of discussion in today’s post.
If you were like most children (me included), one of the things you looked forward to most was receiving an allowance at a regular interval of once every week or two.
The intended aim behind the allowance was twofold – 1) for you to be able to buy things that you want and 2) to teach you to begin thinking of managing your own money.
I am in agreement with the first element of the aim of an allowance. If I ever do have children, one of the things that I would want them to experience is being able to have access to certain opportunities to increase their happiness.
However, it is the opinion of this blogger and Troy Dunn in his book referenced above that too many times, instead of teaching children how to manage money, the receipt of an allowance only teaches a child 1) how to spend, 2) rely on their parents for funding, and 3) become accustomed at a young age that it is better to earn a steady salary than invest money to start and grow a business.
If money is simply handed to a child each week, it is my belief that it is seen as more of a gift, instead of what it actually is in the real world: compensation for work done (just as it is at your full time job).
Item #3 above is a big topic discussed in the Robert Kiyosaki Rich Dad Poor Dad series. In his books, Kiyosaki states there there are three ways to become rich. You either have to inherit wealth, marry wealth, or create it yourself. And, he mentions that the largest percentage of people create wealth by starting businesses that create value for other people.
Because of this, Kiyosaki believes that the primary goal of parents should be to encourage their children to start something that helps others from a young age, instead of teaching them that the solution to life is going to college, getting a good education, and becoming reliant on a salary their entire life. And, by giving them an allowance, parents are merely teaching them at an early age that receiving a regular salary is the way of life.
I agree partially with Kiyosaki on this. I believe that it is beneficial to expose children to the idea of creating something of their own.
However, I also I believe that working for a salary is a good way to gain experience and learn the skills that may be necessary to start the type of business you want to. In addition, I see nothing wrong with working for a salary if you are doing the type of job you love.
An alternative to an allowance – Give your children the most powerful gift of all: the gift of want
In Troy Dunn’s book, he encourages parents to (as an alternative to just giving children an allowance) give their children the gift of want by teaching them to earn the money they need to buy what they want themselves.
By doing this, the children will get used to the idea of creating value for others being the key to obtaining what they want in life as well.
If I really think about it, the gift of want was probably the best gift that my parents gave me. They inspired me to always want to learn more and make more of myself, and for that, I am very thankful.
Troy mentions that this can be done in several ways. First, if they are old enough to be employed part-time, they can obtain a job. However, if they are too young to be employed, parents can help them to create their own businesses.
What are some examples of these businesses that children can create?
Troy describes in great detail many of potential businesses. However, several of them are listed below. Think lemonade stand type ideas!
- Scrubbing and cleaning tile floors and showers in people’s bathrooms
- Selling items of eBay
- Having garage sales
- Preparing meals from customer’s own recipes
- Convert old VHS tapes to DVDs.
- And more!
Keep on learning!
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