In the heart of the Midwest, where families thrive on shared values and practicality, there's a growing need to instill financial literacy in the younger generation. John Lanza's "The Art of Allowance" is one of many helpful tools to help parents and educators on this journey, offering a roadmap for parents eager to empower their children to make sound financial decisions.
Why Read "The Art of Allowance"?
John Lanza, a seasoned expert in financial education, has penned down a guide that resonates with families seeking to set future generations up for success. The principles he lays out in "The Art of Allowance" are universal, providing practical advice that can be applied to nearly any household. This book is not about money; it's about nurturing a healthy relationship with finances that lasts a lifetime and sets up the reader's loved ones for success.
Key Principles
Financial Conversations
Lanza advocates for open and age-appropriate discussions about money within families. It's about turning everyday moments into learning opportunities - from grocery shopping to vacation planning. An easy way to achieve engagement while at the grocery store is to give the child $10 with instructions of making two food purchases, snacks or breakfast are great options. If they go over their allotment, an item is returned or a lesson in counting money ensues to determine what is needed to make the purchase. Children learn how to count currency as early as first grade in some areas, if not sooner with the parents.
Put it into action. Initiate financial discussions that the child(ren) can relate to. Each child is different and by normalizing the discussion at an early age, the odds of successful financial literacy skills increase as they grow older.
Allowance as a Tool
Beyond providing funds, an allowance becomes a tool for education. Lanza encourages parents to use allowances strategically, teaching children about budgeting, saving, donating, and making thoughtful spending choices. The reader giving their child(ren) the autonomy to make choices on spending empowers the youngster to learn at an early age how rewarding or defeating it feels to have either grown their nest egg or squandered all of their money on impulse purchases. Lanza's recommendation is to give the child $1 for every year of age, meaning a 7-year old would receive $7 per week. Out of said $7, divide the funds into three categories: (1) spending, (2) saving, and (3) giving.
Put it into action. Encourage the child to choose an item to save their spending funds for. The goal should be age appropriate and obtainable. In the example above, for the 7 -year old who may be allocating $2 per week into the spending category, it does not make sense for them to be saving for a new $100 bike. That would take forever! The item needs to be priced so they need to let the funds accrue for several weeks, or maybe months, but not so long that they become discouraged.
Goal Setting
Setting financial goals is a fundamental principle in "The Art of Allowance." Lanza underscores the importance of involving children in the process, fostering a sense of responsibility and instilling valuable lessons about delayed gratification. Hopefully, the delayed gratification deters the child from becoming an impulse shopper later in life.
Put it into action. Allow the child to help set their goals for each category of their allowance. What item(s) do they want to purchase with their spending money? What good causes do they want to utilize their giving dollars on? How much would they like to have in their savings for long-term goals? By having the child set the goal, it makes achieving the goal that much more rewarding.
Conclusion
"The Art of Allowance" by John Lanza is more than a book; it's a blueprint for nurturing financially literate individuals. As midwesterners committed to the well-being of our families, let's embrace the principles outlined in this guide. Pick up a copy, embark on a journey together, and witness the positive impact it can have on your family's financial future. It's time to unlock financial wisdom and empower the next generation.
