I have a confession: we need a change of plan

Remember, back at the start of this Teenage Budget blog, our contract for the living allowance included a phone payment? We were supposed to take $40 per month, but we forgot and have let it slide all this time. We also continue to see Mr14 NOT budgeting, because he’ll, “get $50 again on Sunday”. A colleague of Matt’s, with grown-up kids, said he didn’t see budgeting kick in until he switched his kids to a 6-month lump sum. They only ran out of money once and are now pooling funds together to buy a house.

So, I can see what we need to do. On October 1st, we’ll give Mr 14 3-months’ worth of allowance and we’ll see how that goes. He still has his two flyer-delivery customers to top up his funds. And, we’ll take the phone money out, in advance, as a deduction.

 

 

Building relationships

We’ve all heard the saying, it’s not what you know, it’s who you know. Even so, they don’t teach it at school. For the past year or so, Matt and I have been taking the kids to evening work events put on by one of the professional circles we mix with. Taking the kids along to these events means they become familiar faces to some of the people we know, and vice versa. There are lots of other incidental benefits worthy of other work/life balance blogs, but where Teenage Budget is concerned, we wanted to introduce our kids to people who they may be able to reach out to for their first internships or works experience opportunities later on. This is certainly the kind of social engineering a parent takes on, but what I’d never thought about, was the networking kids are unconsciously doing on their own, whenever they become familiar faces at a corner store or takeaway shop.

Mr14 has been routinely spending part of his living allowance on hot chips from the nearby fish & chip shop. He’s in there so often, ordering chips with extra chicken salt that, soon enough, the owner of shop came to know him by his order and struck up a conversation. He asked Mr14 whether he had a job, to which he brought up the flyer distribution, and a deal was struck. Mr14 would deliver a box of a thousand menus for $50 cash. That’s $5 more per 1000 than the flyer distribution company, and, if he lines up to deliver menus at the same time as he has another letterbox run going, he doubles his money for the same time and effort out walking. He’s yet to coordinate both to happen at once, but he has just collected his first $50 cash payment, and can now claim he has his first direct client and he created that relationship entirely without us.

Currency conversion challenge

We escaped the Melbourne weather for a holiday in warmer climes, last week. Most of the time, we stuck to the pools and the games room, but we did get out to explore the local village shops in Khao Lak and do a bit of sightseeing.

It’s not unusual for us to do the currency maths out loud with the kids when we go out eating or shopping. It’s even better when we travel somewhere with an active cash economy, like South-East Asia, because the different appearance of the local currency is engaging to the kids.

So, I decided to set a challenge after having done enough rough currency conversions while we were on the go earlier in the week.

We gave Mr 11 and Mr 14 some Thai baht and challenged them to spend as close to AU$10 as possible. We ran the challenge in the nearby 7eleven and they were allowed to choose whatever they wanted. They were instructed to each get a receipt and we would convert based on the current xe.com conversion rate from THB to AUD. The one closest to AU$10 would get a bonus $10 loaded onto their Spriggy card.

After loading up on all the snack foods and hitting the registers, here’s where we ended up. Mr 14 on the left, Mr 11 on the right.

Lucky Mr11 gets the bonus, and Matt retrospectively wishes we’d stipulated $10 or UNDER. Too late, mate. 😆

Recognising a bad deal

Mr14 and his mates occasionally go to a 24/7 computer-gaming lounge to play Fortnite and what-not, because some kids are on PLaystation and some are on computers or Xbox and cross-platform matches aren’t possible. (See?! I know what’s going on!) They decided to try a new place, recently, because it was cheaper than the usual place.

I got a text an hour after they started saying, “this place is ass”, because other people were smoking inside where they shouldn’t be, and the internet was “balls”. They were denied a refund, probably because they were teenagers and didn’t know how to respond. Mr14 had just been paid for a recent letterbox drop, which meant he was cashed up to solve the problem, and he offered to buy the group a gaming shift at the usual place.

It was lucky he had the money on his card for the group to be able to stick to their plans, but it was a good experience in handling a bad deal. They tried. In the end one of the dads called the crappy place and demanded a refund, so Mr14 got his original money back and his mates repaid the fees he stepped in to cover.

Have your kids had to stand up for themselves over a bad deal? How did it go?

Unexpected generosity

Photo by Annie Spratt on Unsplash

Mr10 turned 11 about a week ago and I think it’s probably not uncommon for a parent to do the gift buying on behalf of the rest of the family. That’s what I was expecting to do when Mr14 announced his intent to buy a JB Hi-Fi gift voucher for his younger brother. I gladly took Mr14 and his girlfriend to the shopping centre and went my own way to buy Mr10>11 a pasta machine for his birthday.

Imagine my surprise when we reconnected an hour later and Mr14 had bought a $50 gift voucher and his own card! The card was Ms15’s idea, but both Matt and I were happy to see Mr14 being so generous, in spite of limited funds. Never mind the slightly self-serving intent behind the choice of gift and articulated in the birthday message on the card—”now you can buy your own Fortnite Battle Pass”.

However, it does demonstrate that he lives week to week in comfort, knowing that he’ll be getting $50 again, come Monday. Still no savings, and still prioritising leisure and takeaways over haircuts and clothing. He’s just about grown out of his winter wardrobe and it’s taking all my effort not to leap in there and save him with some cheap Kmart clothes. 😬 Oh wells!

Big ticket items

Image by NRK-P3

If you’ve been reading Teenage Budget for a while, you might remember we incentivised Mr14 to save some money by offering an extra $100 if he still had $200 at the end the last school holidays. Well, he made it. Aided, in part, by losing his wallet with his debit card in it. Forced savings, indeed. So, he scored his bonus, minus the $10 card replacement fee.

Now that we’re coming into Winter, I routinely point out that it might be a good time to go opp-shopping at Savers. But, as long one still fits into the tracksuit pants, why bother?

“I don’t want to spend the money”, he says.

Fair enough. Although, let’s just ignore the death by a thousand paper cuts that comes from buying the Slurpees and chocolate bars. And the potential for diabetes.

Instead, he bought his own ticket to see Kendrick Lamar in concert and will be going with a bunch of friends. He doesn’t seem to be particularly impressed with himself for funding his $180+ ticket purchase. I asked him if it feels good to have bought his own ticket.

…meh…

“What if you had to ask us for money to buy you a ticket? We might have said no.”

“I guess.”

Pfft. Teenagers. Maybe it’ll be something he remembers later on, once he’s had the experience of being there.

 


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5 ways to start a money conversation with your kids

Most people parenting teens grew up in households where the financial discussions happened betweens the adults. While you may have been encouraged to get a job and do the grocery maths, you might’ve grown up shielded from the learning opportunities that come from making financial mistakes. I was saying to a parent-friend of mine the other day, that owning up to money mistakes feels similar to exposing the way you lost your virginity—risky, awkward, and even embarrassing. This guest post on Teenage Budget, from the team at Clover, came with perfect timing. Thanks for sharing it!
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There’s more to life than money – and it doesn’t necessarily make you happy. And, as The Beatles so famously crooned, money definitely can’t buy you love.

But that doesn’t mean it’s not important – or that you shouldn’t find a balance between understanding the importance and power of money, and not letting it run or ruin your life.

So while it won’t buy you happiness or love, imagine your kids growing up not knowing how to make, save or invest it. Imagine that ‘budgeting’ or ‘finance’ are foreign, meaningless or swear words to their ears.

Now consider this: When it comes to what your children know about what money is and how to manage it in their lives, that’s almost entirely up to you.

First, there’s leading by example – meaning your kids naturally take in your attitude and habits when it comes to money, spending and debt, simply by being observers.

And then there are those sit-down conversations about money over a TV dinner. Are they important? They sure are. Here’s how to start one of them:

  1. Talk about your money mistakes

There comes a time in every kid’s life when they realise that their parents are fallible people, too – and it’s usually a moment of deeper connection.

Yep, we’ve all made money mistakes, and most of those mistakes are filed under regret. You didn’t invest early enough. You racked up too much credit card debt. You spent too much on your wedding.

By openly talking about these little and big mistakes, not only will you reveal yourself as a real person to your kids, you’ll provide an insight into how you came to be wiser about what money means.

  1. Talk about your income

It’s not too hard to start talking to your kids about what money is for. “Look around,” you can tell them over the dinner table. “Money paid for the light in the room. The heat in your roast chicken. The socks on your feet. The app on your phone.”

But these days, particularly as we pay for groceries by pushing a bit of plastic onto a PayWave scanner, children can almost forget that money is even a tangible thing. They can fail to fully understand why you’re attracted to those ‘Special’ labels on the supermarket shelf. And they can almost not realise that getting up and going to work is not just a sensible-adult-thing-to-do – it’s to charge up that magic card with real money.

  1. The media you consume

As a kid, I vividly remember my Dad exclaiming ‘I hate this advert!’ during an evening soap. I didn’t really understand why. It seemed bouncy and colourful and giggly enough.

But now in 2018, even smarter advertising is pretty much everywhere – on your kids’ apps, their YouTube videos, their websites and even in the form of almost subliminal product placement in shows and movies.

Children can so easily be persuaded by the product that has been placed in that movie – so let them know exactly why a company might be doing such a thing. Entertainment is cool, but commercial scepticism is crucial.

  1. The things you love

All of us have hobbies, passions, loves and goals. Maybe yours is cycling – requiring a flash-as-can-be $10,000 road bike. Maybe it’s an end-of-year overseas trip. Maybe it’s a cushy retirement and an endless stream of five-star cruises.

Your kids need to understand that while these passions and goals are what life is all about, they also require budgeting, saving and investing … boooring!

In other words, skipping a Sunday breakfast at the cafe, accepting some overtime, or setting up an account at Clover may not be for immediate Millennial-style gratification, but instead part of a grander scheme that will pay off nicely a little further down the track.

  1. Your money attitude

Just as the world of advertising wants you to almost mindlessly consume its money messages, it’s the same deal beyond that as well. For instance, your credit card company tells you the minimum amount to pay – but doesn’t necessarily tell you that it’s much wiser to pay a little more back than is recommended each month.

It’s the same when you’re dealing with a company or a boss. Product or service not good enough? Tell your kids how you dealt with your demand for a refund or your complaint. Angling for a pay-rise? Let your kids know that there’s a fine line between being a nuisance and being assertive enough to get what you really deserve.

Money and kids: It’s a balance

Yes, talking to kids about money is a balance. Finance is not everything, and it’s not the key to happiness – but getting a firm understanding of how the financial world works and a healthy attitude towards money is much more than empowering for your kids – it’s nothing less than a key to financial freedom. So while not making it THE topic of dinnertime conversation, definitely don’t make it a taboo, either. Bon appetit!

 


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Employing the stick

Last time I talked about Mr14’s preference for the stick. Or, as educators call it, negative reinforcement. Before I go on, negative reinforcement isn’t making something bad happen to you, if you don’t do what you’re supposed to. Negative reinforcement is when something stops happening as a result of you doing what you’re supposed to. It’s like the seatbelt alarm in your car turning off when you plug your seatbelt in. It’s the reward of taking that annoying noise away, it’s not the application of punishment. In Mr14’s case—he delivers his flyers, we stop nagging.

He broke his arm skateboarding a couple of weeks ago, and he had less than 30% of his delivery workload left to do. Matt and I were prepared to help him get it done when he declared he was fit enough to do it himself. He could still carry his backpack with the flyers in it and could wedge a bundle in the sling. No problem! After he left, I couldn’t believe he hadn’t taken the last two bundles. It was probably the last 30 minutes of walking that he would have to do for this batch of work, and he’d decided to put that off. He may never appreciate the psychic burden I felt on his behalf!

When he got home from his morning delivery route, what do you think we did? Well, it was Matt, mostly. We had a discussion about delaying the last bits of work that still need doing, and how much better it would have felt if he was able to come home knowing that it was all done. So, we got the stick out—as per his stated preference—and made him finish the delivery.

The moral of this post is: you eat the frog, or it’ll keep croaking at you!

Money, motivation and teenage enthusiasm

We’ve had some interesting conversations with Mr14 relating to motivation. He’s been wanting to save money to buy his own gaming computer, but he doesn’t have a good track record with saving. This gaming computer is a frequent subject of Mr14’s conversation and research, and with school holidays on us again, Matt reminded him of his holiday spending habit. That is, ending up with $0 at the end.

We’re the types of people who like to dangle carrots, but it doesn’t seem to work on Mr14. I recently tried offering him money in exchange for paying more attention in class, but he wasn’t interested. We’ve also offered to match any income he may raise through busking. He said no to that too. So, it prompted us to ask last night, “do you prefer carrots or sticks?”. After explaining what we meant, he said that he responds better to sticks. He’d rather avoid losing something by getting the work done than to get the work done and gain something.

That’s consistent with the evidence of the past month. He’s managed to save some money purely through not having access to it— because we hadn’t topped up the parent funds on our Spriggy account. That’s what we call forced savings, and adults achieve that through tax or utility bills by routinely overpaying, or by channeling automatic payments into an interest-bearing account.

For now, Mr14 is swimming in cash. He’s finished a big letterbox drop and he’s just had his delayed allowance payments drop into his card. We’ve got two weeks for this school holidays. Let’s see how he responds to Matt’s latest carrot: if there’s at least $200 left in the account at the end of the holidays, he’ll give Mr14 $100.

Does your teenager respond to sticks or carrots?

 

We do not have a commercial arrangement with Spriggy, except as customers, but if you sign up with this affiliate link, your account will come pre-loaded with $5 and our account will be topped up with $5, too.

Impacts on spending decisions

It would be a mistake for me to have you thinking that introducing a living allowance to our teenager has gone smooth AF, because it hasn’t. Like I mention in our about page, life is an endless experiment, and we tweak and tune the parameters of the allowance as challenges crop up, and there have been some challenges. But, we have seen glimmers of the kind of thinking we wanted this big change to inspire.

Just like large-scale change in the organisation where you might work, a change to the system requires a change to the way we think as we adapt to the new system, and that can cause bad moods. The Kübler-Ross Change Curve shows you the range of emotions and behaviours that our new allowance structure has influenced.

We all travel this rollercoaster, not just the kid, so be prepared for your own frustration, denial, and depression. Also be aware of micro-leaps all across this curve within a single day or week. Don’t forget that this curve represents the progression of human adult emotions in response to change. We’re living with teenagers in this scenario, so it’s all over the map.

Here are some of the impact moments I’ve observed:

Self-directed price comparison and cost-saving decisions

One of the early positives was when Mr14 (he just had a birthday) wanted to go to the movies with friends the next day. Instead of just agreeing to meet everyone at the Hoyts, he researched and found the same movie at a cheaper price from a nearby arthouse cinema, saving himself about $5 and using that savings to buy the requisite movie junk from the supermarket downstairs, rather than from the more expensive candy bar.

Checking in to avoid a potential impulse buy

The day before the movies, Mr14 was hanging out in the city with friends and texted me to ask if he could spend all his allowance if he happened across sneakers that were on sale for the right price. I sent back a text reminding him that he had movie plans for the next day, and that the decision was ultimately his, but if he had no money left, he wouldn’t be able to go to the movies. He texted back “dw”. That means don’t worry.

Lamenting poor spending decisions

Mr14 sent me a text one day last week to say that he’d be home later and would be eating out in the city with a friend. I was obviously exasperated at the short notice and that I’d made plans to cook spaghetti and meatballs for dinner, but you pick your battles, right? He came home with a box of KFC and sat at the table with that while Mr10 and I were eating our home-cooked meal. Part way through, he said he would’ve preferred to have spaghetti and meatballs than to have spent $15 on KFC.

So, that’s the good stuff. What about the tough stuff?

I fell off the co-CFO wagon

Mr14 had a few days left of school holidays after being away for a week and he was enjoying playing online games with his mates. His mates decided they wanted to play a CS: GO tournament (or something) and he had to pay to join (or something). It would be USD$25. He wanted an advance. I acquiesced, due to decision-fatigue from the school holidays, but took $34 from him straight out of his next allowance. That was the $25, plus conversion, plus 10% interest. Matt and I have since discussed clarification to the loan clause in the contract to say “no payday loans”. When you’ve got clear-cut boundaries, decision-fatigue will have less influence.

Reverting to past behaviours

Mr14 called me yesterday afternoon from the shops. He asked me to transfer $2 to his Spriggy card. I asked why. He didn’t have enough to buy the can of whipped cream that he planned to squirt directly into his mouth. I said, “no, I’m not an ATM”, and hung up. He came home with a block of chocolate, no cream, and no money left on his card.

As you can see, we’re not even through the second month of this and we’re all over the map.

Share your #wins and #fails in the comments. It’s all good. x