We are losing at an alarming rate the ability to create value, and then profit from the value we created.
And I propose that one way to change this is by eliminating allowance, and instead charging your kids rent beginning at 6 years old. Increasing every year.
Here’s my reasoning (feel free to be wrong and disagree)
The two most important financial skills you can equip your child with are these:
1) The ability to create value for someone willing to pay for it.
2) The ability to create mutually beneficial relationships with those who can help them gain more skill. Mentors.
Here’s why allowance is ridiculous.
What does allowance teach us?
Basically, how to handle money that shows up out of nowhere. That’s called welfare.
And don’t even start with the excuse of “chores” being the reason for the allowance.
Not long ago people called that “life”. Things you did as a participating member of a family.
You helped with the dishes because you dirtied the dishes. You took out the trash because you helped create the trash. You shoveled the driveway because you used the driveway.
So why is charging rent better?
Simple….
…let’s say you charge your 6 year old rent in the amount of five dollars a month. Now as a parent you become the mentor. You help them figure out what value they have, or can create, that someone will pay for.
Maybe they could pick up your neighbors yard. Remove all the sticks for 5 dollars. The ways to make the money are endless.
Then when they do a good job you can help them make a little flyer. You could teach them how to ask the neighbor for a testimonial to put on the flyer, and then walk them around the neighborhood handing them out to the other neighbors.
They will probably be making $30 a month.
Now at the end of the month you have a family financial meeting. You collect rent, take out taxes, and talk about what they should do with the other $25.00 they earned.
As they get older, and start really profiting from the value they create, you can start asking questions like this:
“Who could help you get better at (insert whatever skill they are wanting)?”
Now you help them find this person, and teach them how to offer value in return for help.
Is there any doubt, charging rent to your kids starting at 6 years of age is better than giving them allowance?
Think of all the learning lessons, life skills, and confidence they will gain.
Heck…they will probably be employing their friends in the neighborhood. Outsourcing their siblings for the “life” chores they have decided aren’t worth their time.
With this method you still get the chance to teach them about how to handle the money.
The main difference is this:
You are now helping them manage the money they earned by creating value for others.
That skill is priceless. That skill will change the future of our country.
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