You Can Do Better without “Free Stuff”


My children are paid on a commission system, rather than getting an allowance.  Instead of getting a fixed amount each week, they get money for doing different jobs like taking out the trash, raking leaves, or putting away the dishes.  There are also other chores they are required to do, like picking up after themselves and helping with big family tasks like putting stuff away for the winter.

I asked my son last week if he would prefer an allowance, and he emphatically said, “No.”  As I had hoped, he realizes that he can make far more by working than he can through an allowance.  He knows that if he really wants to buy something he can take on more jobs.  He’s even talking about starting to invest some of his earnings.  He can’t wait until he is old enough to mow the lawn since that job would pay a lot more than his current options.

There is certainly the allure of free stuff in the adult world.  If you make less than a certain amount you can get subsidies from the government.   If you don’t make enough you can delay payments on your student loans or get free college for your children altogether.  You can also get into a nursing home for free if you have nothing in the bank, where you’ll pay exorbitant prices if you have savings.  Oddly, the cost of the nursing home seems to always exactly equal whatever you have.

It is certainly attractive to sit at home and collect unemployment rather than get up early and drive to work.  It doesn’t help that benefits are almost as much as the pay from the job – sometimes even more if you include expenses in the calculations.  This is shortsighted, however.  While benefits may roughly equal the pay of the current job, the experience you gain and the connections you make will enable you to get the next job, and then the next.  Or maybe it will allow you to open your own business and become successful.

Beyond the monetary rewards is the sense of accomplishment and pride you receive from working.  You are helping other people, even if they are paying you for the help.  You are creating things that were not there before.  You are doing something good and worthy with you talents.  Your life means something – you are important, whether you are the CEO of a major corporation or the janitor that keeps the workplace clean and sanitary so that people can work and not get sick.

The other thing to consider is where wealth comes from and the effect of too many people not contributing.  Given that most everyone can produce a little more than they need, and some people can produce far more, it is easy for a society to take care of those who truly can’t take care of themselves if everyone who can is working and doing what they can.  If able-bodied people don’t work, however, it means that there is less available for everyone.  It also causes those who are producing more to begin to only produce what they need or stop producing entirely (or move somewhere else).  While it may seem like you are getting things “for free,” you could actually have a lot more if you would only take what you earn.

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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.

7 comments

  1. I think that is a flaw with the democratic system. In the recent U.S. election, both candidates were forced to offer more free stuff in order to get elected.

    Even with a $16 trillion deficit, American’s still voted for the guy who offered more free stuff instead of the guy who ran on a platform on less spending and paying down the deficit.

    • There were a lot of people who stayed home, however. I understand that there were actually fewer Republicans who came out than in 2008, which is odd given the apparent passion. Romney may have been too Centrist to excite the base.

      • Or maybe not centurist enough? I talked to a lot of people about why they would want to vote for Obama running on a platform of bigger government and more spending and they said Romney was a Mormon who was pro-life.
        The republicans need to run someone who is fiscally conservative without coming off as some out of touch religious nut.

      • I agree that of the people voting, being more centrist would appeal to more voters. There are people who don’t vote, however, because they say both parties are exactly alike anyway. Maybe they would come out and vote if someone like Herman Cain was the nominee instead of Mitt Romney. I’m not sure if some people who were religious didn’t vote because Romney was Mormon, since there is some religious bigotry against Mormons.

      • I would love to see an atheist run. Seems every president has to pretend he is deeply religious in order to run. Does anyone really believe Bill Clinton was a man of the bible the whole time he was doing Monica?

  2. Its more of a community to be unemployed and on welfare and usually these people make out much better than a worker would. A newspaper in my area took one woman off welfare and gave her a job. At the end of the term of the story, she had less in her bank account than the welfare woman. Also keep in mind the time that the unemployed woman got to enjoy with friends and family while the working woman was unable to and then came home tired at the end of the day.

    Now add in the cheats, the ones who work cash jobs (fix-it, lawn service, panhandling, etc) and end up bringing in a few hundred to a thousand dollars each week that goes unclaimed. Then they receive wellfare/unemployment and benefits as well. These people are making a lot more than someone legitimately employed making $50k/yr if you consider that welfare health benefits are insane(everything is free).

    So its really not that you can have more if you do work, its really that you can have more and enjoy your life if you don’t work, or if you cheat.

    • Thanks for the comment and thanks for reading. I’m not sure if I agree with the conclusions, however. While in the short term someone may do better with unemployment, I’ve never met anyone on unemployment or welfare who does as well as someone who is working and working hard. Over time, things just start to happen for you when you provide for yourself, while you are always hampered by restrictions when you are receiving an allowance. (Gee, if I make a little more, I’ll lose benefits, so I’ll sit here rather than do things that could move me up in lifestyle.) You therefore tend to stay in place. Also, if enough people choose to draw welfare rather than earning a living, the standard of living for everyone will start to erode.

      There is also something that happens to you when you are not doing what you can. You start to get greedy and bitter. You lose pride in yourself and don’t do things to better yourself. You may have your basic needs met, but you don’t meet the higher needs to do something important. While the rich businessman is always portrayed as the greedy miser and the poor beggar the benevolent giver (a la Les Miserables and La Boheme), I’ve noted the opposite to be true. People I know who run businesses and are successful tend to be very giving (look at Mitt Romney, giving away something like 15% of his earnings).

      Now as far as cheating goes – taking money under the table and not paying taxes – that may work for a while, but I don’t think they tend to be as successful as those who live by high ethics. A high moral code is cited by Stanley in “The Millionaire Next Door” as a key trait millionaires he interviewed said was an important part of their success.

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