Teaching Kids About Money – Commissions, Not Allowance


Giving kids the money skills they need … so they don’t come back.

One of the important thing to teach children is the value of work.  Specifically, the concept that money comes from hard work – nothing comes for free.

Unfortunately, many children are routinely taught that everything will just be handed to them.  All of their meals are cooked and served.  The dishes are cleared for them and washed after dinner (or, more often, they are taken out to eat every night and never need to worry about paying the bill).  Their clothes are bought for them.  School supplies, uniforms, and activities are provided.  They even get money for breathing air each week or each month.

Obviously providing many of these things is simply part of being a parent (although obviously getting the children to help as they are able with meal preparation, laundry, cleaning, and other tasks should be done).  The allowance, however, causes children to expect money to simply be handed to them.  Replacing the allowance with commissions will teach children that money is gained by performing work.  Here’s how:

1.  Develop a list of jobs that can be performed, along with a payment schedule.  These should not be things that the children should do anyway – like picking up their rooms or helping clear the table after dinner.  These should be extra tasks that are needed to maintain the house.

2.  If the tasks are completed, the child receives a commission for doing them.  If the tasks are not done, no commission is paid.  There should also be some penalty for not doing the task within a reasonable amount of time, such as taking away the ability to do the task for a period of time.  For example, the trash needs to be taken out at certain times, not when the child feels like getting around to it.

The payments for the jobs should be reasonable – what you would pay an adult to do a similar amount of work. After all, just because they are children doesn’t mean they should receive $0.50 for washing the car.

An example list of tasks and commissions is the following:

Taking out the trash: $1.00

Putting away the dishes: $3.00

Sweeping the floor: $3.00

Mopping the floor: $5.00

Weeding a garden bed: $10 per hour

Mowing the lawn: $20

Folding the laundry: $5.00 per load

Hopefully, by doing tasks to earn money, rather than simply being handed money, your child will begin to learn the importance of work and begin to associate work with earning money.

Have a burning investing question you’d like answered?  Please send to vtsioriginal@yahoo.com or leave in a comment.

Follow on Twitter to get news about new articles.  @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

Reduce Your Taxes. Four Steps to Take Now.


With the New Year approaching, now is the time to make sure you are getting all of the tax benefits you can.  Remember it is almost always best to delay income and pull loses and deductions forward.  Here is a list of things to consider:

1.  Sell losing positions in your portfolio.  Remember that you cannot buy them back for 30 days (or sell them if you bought within 30 days), of you will have a wash sale and not be able to deduct it.  Instead, wait the time out or buy another similar stock.

2.  Max out your retirement account contributions.

3.  Max out you educational IRA contributions and other college savings accounts.

4.  Be sure to spend remaining funds in use-it or lose-it health spending accounts.  If you need new windows or a heating unit, buy one before the end of the year and check on savings for installing energy-efficient models.

Don’t wait until January or you will lose the opportunity.

Your investing questions are wanted.  Please send to vtsioriginal@yahoo.com or leave in a comment.

Follow me on Twitter to get news about new articles and find out what I’m investing in.  @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

Don’t Squander Your Good Fortune


Perhaps those that have the most talent also tend to live closest to the edge financially.  An individual who is able to make a lot of money through his or her talents often thinks that he/she can always make up for any overspending.  A singer who makes $10 million a year will believe that she can afford lavish vacations and expensive clothes because she will always have $10 million per year coming in.  Even people with lower incomes that are still substantial – for example, the executive who makes $250,000 per year – still tend to believe that they can afford to take out expensive home loans and run up the credit cards because that big paycheck will always be in the mail.  A recent post by Dan Miller, however, shows that talent isn’t enough to ensure a self-sufficient future http://www.evancarmichael.com/Work-Life/1913/Talent-is-Never-Enough.html.

First of all, there is always the chance of an injury preventing you from doing your job anymore.  Your chances of being disabled are far greater than the chances of being killed.  For this reason, everyone should have disability insurance.

Even if an injury doesn’t befall you, however, it may be that changes in the industry or within your company may cause you to become out of work.  Many in their sixties or even fifties who find themselves laid off often find it difficult to find a comparable position at anywhere near a comparable pay rate.  After years of doing the same thing, your talents may not match what another company is looking for.

This is why it is important to be building your pipelines while you are able.  You want to have money flowing into your bank accounts whether you work or not.  Divert some of your resources from each paycheck into investments.  Saving money for retirement isn’t enough – you must put money away in taxable accounts as well to provide a source of income should you no longer be able to work.  Even if you are simply out of work for a period of time, that steady income stream from investments will allow you to calmly search for another job rather than desperately searching because you need to replace your income immediately.  Remember that those who are desperate are never in a good position to negotiate.

Also, avoid taking out debts and pay as much off as you can.  No one can repossess your car of you own it.  Your home is safe if it is paid off, assuming you can afford the property taxes.  There won’t be any nasty calls to your house from credit card collectors if you don’t have any credit cards.  Minimize your recurring payments as much as possible so that you can easily cut back as needed.

Just because you have great talents and are able to make a lot of money doesn’t mean it will last forever.  Remember to build your pipelines to assure your financial future.  Your family is counting on it.

Have a burning investing question you’d like answered?  Please send to vtsioriginal@yahoo.com or leave in a comment.

Follow on Twitter to get news about new articles.  @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

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