Money Smart Family System Book Review

The MoneySmart Family System: Teaching Financial Independence to Children of Every Age by Steve Economides and Annette Economides was sitting on the shelf in the new releases when I went to story time with my son.  I had read their previous book and I thought that I should grab this and check it out.

It has always been fascinating that two people raised in the same house could come out with such very different ways to deal with money.  I know so many siblings where one is super careful with money and the other is a spender.  My husband and I are both savers although not always on the same page with our saving methods, we often agree.

We weren't exactly sure what we were going to do in order to make sure that my son learned the best ways to save and be responsible.  I have certainly thought a lot about it and my husband and I have talked about it but I don't think that we have gotten any closer to a solution.  This book was super helpful providing specific steps on how to teach your children responsibility and the value of money.

The main premise is that you pay your child an allowance (although they don't call it that) based on the different points accumulated during the week:  Morning, School, Chores, and Round Up.  For 3 to 5 year olds, they suggest 5 cents per point.  Normally 23 points per week would cost $1.15.  If extra point incentives are earned by doing extra chores, at 25 points the payout would be $2.50.  The total cost per year (52 weeks at double pay) would be $130.  As you get older, 6 to 8 years old is 10 cents which would be $2.30 at 23 points or $5.00 at 25 points with double pay.  The 9 to 11 year olds is 15 cents and the 12 to 16 year olds is 20 cents.  They don't pay their children after they get their part time job because they will get a greater pay at their part time job.

We don't normally do those special things like get snacks or toys unless it is a special occasion so I am not sure how much money we actually spend on that stuff through the year (hopefully under $130).  Plus, I am not sure how my son would currently handle the extra money to spend as he wants because he would most likely want to use it to buy junk food.  The authors talk about how children understand delayed gratification and choose to not get junk food because they are saving for a big toy but I don't know if my son is mature enough yet.  Also, he knows that he can ask many extended family members and they will get him what he wants.  Second, I don't think that he is mature enough yet but I understand that you are starting the habit early so that you create a routine when they are young that carries through to their older years.  To steal my son's quote, "Maybe when I am five" which is what he always says when he doesn't want to try a food that we are offering.

The plan divides the money Give 10%, Save 20%, and Spend 70%.  The other interesting fact is what is included in the money that the kids have to pay for based on their age.  They have to set aside money for clothes (starting between age 9-11), recreation, and any extras that they want.  The money has to come from the spend bank and the savings is not touched so they have to save their money weekly to get to bigger goals. 

Thinking back to my own experiences growing up (which I did while I was reading), my parents paid for my clothes (I didn't get a choice on what they bought), my soccer league, and almost anything that I wanted including college.  I never got an allowance and I never had to set up a system to save for things.  Whenever I got money from birthdays or special events, I put it in the bank and was a natural saver while my brother often took his money to the toy store to get toys, video games and other things.  I started babysitting when I was young followed by my first job starting when I was 16 (against my parents wishes) and I saved all of the money from working.  My parents wanted me to focus on my school work and do the best job that I could so they didn't want me working but luckily they supported me working on the weekends only at a restaurant when I was 16 years old.  I am not sure why I was such a saver but I know that I lived on very little and saved every penny that I could in order to build up my savings account for the future.  In college when people were going out to the coffee house in the mornings, having meals out, and ordering pizza late night, I was living in a dorm and eating off my meal plan.  I guess I was just lucky that I ended up a saver because it seems to be in my nature but I was able to pay off my student loan immediately, buy a house, and build up my savings so that I could stay at home.

It makes sense to teach your children to be responsible with money just as we teach them good manners and how to read.  I do hope to use some of these tips to teach my son to save and the value of money so he doesn't think that money can just come from the ATM or be magically paid on a credit card.  Are you looking for a way to make sure that your children become responsible with money and don't end up in debt later in life?  I hope that you check out this book at your local library or bookstore.  If you have read it or decide to go pick it up, let me know what you think.  I think that it is worth the read to learn some different options on how to deal with money and kids.