Friday, 18 January 2013

Book Review: The MoneySmart Family System by Steve & Annette Economides

About the Book:  Is it possible to raise financially responsible kids of any age in a society filled with consumerism and entitlement?

New York Times best-selling authors Steve and Annette Economides raised their five kids while spending 77 percent less than the USDA predicted. And the money they did spend was also used to train their children to become financially independent. The MoneySmart Family System will show you how to teach your children to manage money and have a good attitude while they’re learning to earn, budget, and spend wisely.

Learn how to: *Get the kids out the door for school with less stress. *End the battle over clothing—forever *Teach your children to be grateful and generous. *Inspire your kids to help with chores as a member of a winning team. *Prepare your kids for their first paying job. *Help your kids pay for their own auto insurance, and even pay cash for their own cars. *Employ strategies for debt-free college educations. *Truly help your adult children when they want to move back home. *Be prepared to deal with your adult children when they ask for bailouts.

With clear steps for children of every age, The MoneySmart Family System proves that it’s never too early, too late, or too hard to start learning financial responsibility.

My Thoughts:  I liked some things about this book and other parts just missed the mark for me.

The system seems really rigid to me.  The basic idea is that each child has age appropriate expectations for every day including morning routine, chores, school, etc.  For each item that is done (and done well, and done with the right attitude) they are given a point.  At the end of the week the points are tallied and cash is handed out based on how many points they received, and how old they are.  There are opportunities for bonus points when kids show initiative above and beyond the regular expectations and if they hit a certain mark they get double pay.   The money is then split into different areas, again, depending on age.  At the earliest ages they are split into giving, saving and spending.  As they get slightly older they split the spending into both a spending and clothes category.  And even older the savings gets split up into more specific categories.

The basic idea is good, I just think it's too rigid for most families, and goes too far in some areas and not far enough in others.

I do not like the idea of tying almost everything in your family life to money.  I don't want my kids to have a good attitude about doing their chores or getting ready for the day because they get paid for it (or technically, earn points which are then traded in for money).  I want them to learn to do that because it's the right thing to do and is a way in which they can glorify God and love our family.  I don't want my kids to only show initiative around the house because they know they will get rewarded monetarily for it, but because they have a heart for the members of our family, desire to serve one another, and simply see something that needs doing and they do it.  I don't want them to decide to simply not do any work one week and forgo the $4 they would've received because they've weighed the cost and decided a one-week vacation is worth it.  Obviously our children do not this attitude on a consistently regular basis (nor do I!) and it's something we'll all need to continue to work on basically forever.  I just don't like the idea of tying everything to money.

Although this is directly against the advice given in this book, we give our children allowance as a privilege of being in this family.  And they do chores as a responsibility for being part of our family and because everyone needs to contribute to the running of a household.

This doesn't mean that we just give them whatever they want, whenever they want it, or that we foster an attitude of entitlement, which is the Economides' (I find their last name hilarious considering the book topic!) concern with giving allowance without tying it to responsibility.  And it doesn't mean that we can't take money out of their allowance to pay their siblings for doing the work they should've done for themselves.

We do have the My Giving Bank that they mention in the book and I really like it.  It's one piggy bank split into 3 sections - church, bank and store (same categories they listed above).  It helps keep their money divided and, as it is slightly transparent, they can visually see it accumulating.  I do agree that it won't be long until they need to move onto another method that's easier to get the money out of - in this book they do cash envelopes and balance them like a cheque book.

I do like their focus on saving and teaching our children how much those Guess jeans actually cost.  I definitely like their focus on the fact that teaching our children when they are young means that their mistakes end up being much less costly.  They have a 5/50/500/5000/50,000 rule which basically  means that when your toddler makes a mistake with money or wastes it on an unnecessary purchase, that will likely cost only $5.  When your slightly older child makes a similar mistake, it might cost $50.  When your teenager makes a mistake, it could cost $500.  And when your college age child makes a mistake it may cost $5,000.  And your adult child, could mess up to the tune of $50,000.   This is very true and is definitely something to keep in mind.  We need to be proactive about teaching our children about responsible financial management (and model it ourselves!!) and the younger you start the better. So that's definitely something I agree on from this book.

I was disappointed that they didn't mention God throughout the book (because they are Christians - I don't expect every book to mention God!), not even in the giving section!  As a Christian, to me that's the most important part of money management. Recognizing that God has given us everything we have and that we are to be stewards of what He has given us, for His glory.  Without that focus, it's just money management tips that anyone can use - and maybe that was their intent, but it's just something that I found lacking.

Thank you to Booksneeze for providing me with my complimentary e-book review copy.


Miriam said...

I agree with you that children shouldn't be paid for all chores. Our children have chores to do because they live here and therefore they have to help clean and care for our home. They get allowance because there are things I don't feel like I want to buy them just because they ask, so if they ask for something that is a want and not a need, generally I tell them they have to use their allowance for that. I DO, however, dock their allowance if they are slacking too much on their chores, having a bad attitude too often, or yelling NO at me when I ask them to do something that is clearly something that is expected of them. The expectations have been explained in advance. I don't expect them to know to do things they haven't been told are their responsibility. However, if they DO know it is their responsibility and give me a hard time about it, I don't feel bad about taking 50 cents off their allowance. Likewise, if they do extra chores without being asked, I may give them a little extra. I have been debating how to go about the saving/giving part of the whole allowance thing... where did you get these banks you speak of?

TammyIsBlessed said...

Yup, that's pretty much exactly what we do. I read in a Dr Kevin Lehman book about that general idea and I really liked it. He had a great example of when their kids were older and one night a week they were responsible to cook dinner together to give his wife a break. One night they came home and nothing was prepared, so he took his wife out for dinner and docked their allowance accordingly! has the bank here also has it I believe. Not sure if there's anywhere in Canada that sells it or not.

Just for convenience sake (my convenience that is!), we don't do 10% for the giving, we do 25%. We do 25% giving, 25% saving, 50% spending. Dealing with quarters is fine, but I don't go lower than that ;) Obviously once they're making more money they can adjust it, but I'd rather they be used to giving more instead of less.


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