This is part 2 of a series of posts following up on the original Money Management For 5-Year-Olds blog post. It has been about a month since that original post, and I thought it would be a good chance to look at how things have gone during that first month.
Enthusiasm for chores has waned over the past few weeks, but she has been doing them all for the most part. At first, it was a fun game to see the chores get checked off in the app, and she asked what was next. Now it seems to have become tedious for her. I need to find a way to keep things fun and interesting. I was thinking about putting a bunch of things that would require similar effort and time into a bucket and having her draw one each day rather than having set chores on set days.
I think this would turn it into more of an “event” and add a little variety to it. This is something I may start as soon as this week. Additionally, setting some more specific parameters around what is involved with each chore and what she needs to do for it to be considered complete will help.
Last week we started to have some trouble with the chores, and she did most of them, but there were a few she missed. As a result, when we paid her allowance this morning, all of the money that she would normally allocate for spending went to investing instead. We told her if we continued to have issues this week, her total allowance dollar amount would be docked or possibly eliminated. The conversation went pretty well, and I thought we had agreed. Still, she had some very “big” feelings this afternoon about many different things and ended up shirking her responsibility to feed the pets dinner.
I’m conflicted about not paying her allowance at all because I want her to be able to continue to see growth toward her savings goals. In the shorter term, I think finally reaching the money necessary to get her bicycle, and LOL dollhouse will teach valuable lessons about delayed gratification. Longer-term, the investing and compound interest lesson is absolutely imperative for her to understand. The only way we can make that happen is by being consistent in her investment strategy. At the same time, I need her to realize that her choices have consequences, and continuing to pay her whether or not she holds up her end of the agreement does not send the right message about work ethic and discipline.
I know that she wants to reach her savings goals, and I know that it is important to her that she has spending money available if she’s in a position where she would like to buy something. At times, typically due to circumstances that have nothing to do with the chores themselves, she seems to prioritize whatever those other feelings are over the desire to complete her chores because of some external factor. I’m going to have to spend some time figuring out common threads between those situations and maybe be a bit more proactive about reminding her about the time coming up to get those things done.
One thing that my wife and I tried out was to stop her from doing anything fun (watch an episode of Octonauts when she gets home from school, for example) until she has completed her chores. That hasn’t worked perfectly, though. There is often a timing conflict with dinner and hunger, and it creates a lot of stress and pressure around the chore itself, which leads to some of the negative sentiment. At that point, it becomes a battle of wills, and even when she does it, it is in protest. All of this is leading to an overall negative attitude toward the work that she needs to do.
If you’ve got some examples of things that you’ve done to help motivate your kids to help out, or you have any suggestions for my situation, please throw them into the comments below or hop into our Discord to chat with us!
So far, our daughter has had $40 in her “spending” category of her Greenlight account. I will say that a portion of that was money that she had in her piggy bank before we began her allowance that we deposited on her behalf. For the most part, our thought process on her spending money is to buy whatever she wants to with it, whenever she wants to. Obviously, we will not let her buy anything dangerous, but it’s her money to use as she chooses. Once she’s out of money, she’s out. She understands this because we explain it any time she wants to buy something.
We recently took a trip to Clemson, South Carolina, and my daughter was interested in doing some shopping. To this point, she had never used her card. After a few stops and lots of looking, she landed on a Clemon University-themed bow. It was pretty expensive for a bow, but she loved it and decided it was what she wanted to spend her money on. After taxes, it came out to $15.89. My wife got our daughter’s debit card out, handed it to her, and she proceeded to stick the chip in and enter her PIN.
It was an empowering moment for her, I think. She had just purchased something that she had earned money for herself, and she used her own money to buy it. I watched in the app as the transaction happened, as I didn’t know what to expect. It was our first time using the card, we were out of state, and I did not call the bank in advance to let them know we’d be traveling. It went through without issue, and the app updated instantly when she pulled the card out, without me even having to refresh the page.
Her second transaction with the card was a toy in the grocery store. It was a bit over $13 tax included, and she has spent a pretty good amount of time enjoying it. I think she is happy with her purchase decisions in both cases, but there has definitely been a bit more consideration before, during, and after the purchase when it is her money than there had been before. On the way back to the house in Clemson, she said: “I wish I could have my money back. But I still want the bow. I wish I could have my money AND the bow.”
While she is a bit more considerate of what she spends her money on, I think it will take that first time that she really wants something badly but doesn’t have enough money for it for her to completely understand passing on something she sort of wants now to get something she really wants later. Greenlight does have a “round-up” feature that can automatically roll rounded-up change in the spending account over to the savings account. As a result of this, she’ll always have a “whole amount” of dollars available to spend, and she’ll build her savings more quickly without even realizing it.
When we started talking about savings, our daughter had two things in mind. She could not decide which she wanted more, so she decided to save for both simultaneously. Each week, she chooses how much of her “General Savings” money to put toward each fund. We over-budgeted for a bicycle to allow her to pick whichever one she may want. We had initially planned to get her a bicycle for her birthday but went a different route, so we agreed to pick up as much as half of the goal cost. This means, when she gets to 50%, we can start shopping for a bicycle for her, and she can pretty much pick out whichever one she wants. The LOL Surprise Winter Disco dollhouse that she had her eye on had been floating between $200-250 as well, so we went on the high end of the budget range there as well.
This has been a really low-maintenance part of the allowance experience. Every Sunday, we go into the Greenlight app, look at both of her goals, she tells me how much General Savings money she wants to allocate toward each, and I show her a progress update. She has enjoyed seeing the progress, but because the goals are relatively substantial relative to the amount of allowance she is receiving, I don’t think this part is too exciting just yet. Once we get much closer, and especially after she can buy one of these big-ticket items, I think the Savings portion of what we’re doing will become much more thrilling!
Investing has been interesting. In week 1, I explained what a company was, what it meant to invest in a company, why she would want to do it, and asked her to think about some companies she knew. I helped with a few examples, and she chose Disney. I also told her that there was an option to invest in a bundle of good companies all at one time through an ETF, and we put part of the investment money in that.
I’ve asked her to keep an eye out when she goes places. If she thinks a business is doing an outstanding job, we should consider investing in it. As she grows older, we’ll obviously learn a lot more about how to make these choices. For the time being, I want her to be thinking about the value of a company and why she might want to own part of it. She repeated some of the same investment decisions over the weeks but added Target to the mix with the Disney stock and the S&P 500 Vanguard ETF. So far, her Disney stock is down 1.22%, her Target shares are up 1..7%, and her ETF is completely flat. Her total portfolio is down $0.04 over the past month but still represents about a third of her total financial holdings.
Next week, we’re going to look at a more aggressive risk strategy ETF, and we’ve agreed to look at adding another company stock to the portfolio as well. She is showing interest in these numbers, which is encouraging. As they really start to grow, I think they’ll continue to become more interesting.
This section of her money is allocated in a special place within the Greenlight account, earmarked specifically for giving. She understands that she will use this money to help other people, and we intend to make sure she is very involved and engaged in that process. It is currently just building, but we continue to make it a part of these conversations and do something with it soon.