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.