The concept behind an ATM machine is pretty simple. All you have to do is swipe your debit card, press a couple of buttons, and you get money from your bank account.
Now, take a look at how your kids (or grandkids) get their money. Do they work for their money or do they go straight to the “Mom & Dad ATM” machine to make a withdrawal?
Not only is being an ATM to your kids dangerous to you as a parent, but it’s also detrimental to your kids. Rather than teaching your kids how to effectively manage money, they’re just learning how to ask for things nicely and expect flattery to get them what they want, at your expense.
Teaching your kids how money works and the value of money is essential. I like Dave Ramsey’s advice on giving them a commission for work done around the house instead of an allowance. A commission for work is very different from giving your kids a weekly allowance.
Giving your kids money for everyday chores they should be doing as part of the “family chores” doesn’t make sense to me. Things like: making their bed, taking out the trash, keeping their room clean.
Giving your kids a commission actually gives them an incentive to do even more work around the house. This could include things like cooking dinner, planting plants, pressure washing the driveway, mowing the grass, cleaning the gutters, etc.
It’s really easy to set up a commission system with your kids. Just put a price on what each item’s worth, have them complete that task, actually inspect their work, and then pay them. If you really want to get them intrigued, collaborate with them and ask what they think each item’s worth. You might even save yourself some money and you’ll be teaching them how to negotiate.
Once they’re paid, help them manage their money. Set up a jar or envelope system and divide their money accordingly: 10% going to church or a charity, 10% going to save for some big item that they really want, and the rest to spend how they want
Show them how to pay cash for their first car
Before you know it, that big item they’ll be saving for is a car. You are going to make your kids buy their car, aren’t you?
Being an ATM to your kids goes a little further than just money, it even goes as far as buying them big ticket gifts for birthdays, Christmas, or any other special event. I’m always baffled at parents when they buy their kids a brand new car for their birthday and within a few weeks they car’s trashed on the inside or even worse, is totaled in an accident.
My youngest son had a friend in high school whose parents bought him a brand new Ford Mustang convertible with a V8 engine for his birthday. Within a couple weeks he completely totaled the car. Luckily he was OK, but his parents went out and bought him the exact same car.
Surely this kid learned his lesson, right? Far from the truth, he totaled that car within a few weeks. The concept of earning and taking care of the car was never learned and he just started to expect his parents to buy him a new car and clean up his mistakes when something bad happened.
Rather than buying your kids a car for their Sweet 16, help them save up and buy a car that they can take pride in. Why not match what they save. With $5,000 of their own money, they could essentially buy a car – for cash – worth $10,000 with the other $5,000 coming from you.
Teaching the value of the dollar and hard work
How’s that for learning the value of a dollar! Give them an incentive (goal) to work hard, diligently save money, and take pride in their purchase. You’ll also be teaching them to save for a car and pay cash and never having to take on a car payment.
Avoiding being looked upon as an ATM by your kids (or grandkids). Teach them to be independent, self sufficient, contributing members of society. So you (or the government) won’t have to take care of them the rest of their life!