Financial Futures
A juvenile, delinquent on his payments
Elizabeth Lord and her 8-year-old son, Xander, talk about their allowance system, which taught him about paying back what he got on credit.
Elizabeth and Xander Lord with fair booty (Courtesy of Elizabeth Lord)
TESS VIGELAND: We've been asking you, our listeners, for your stories about childhood and money. What your parents taught you or didn't. What you're teaching your kids or not. This week a mom and her son recall the rough start to their allowance system.
Elizabeth Lord: My name is Elizabeth Lord.
Xander Lord: I'm Xander Lord. I'm 8.
Elizabeth: Adults get paid for the work they do for the most part. I felt that Xander should earn any money that he wanted towards things he liked. Getting the mail or the newspaper, that's weighted at 50 cents. His least favorite job in the world is sweeping the back porch, which is $2. And he loves to do yard work and that's about $3, because it's a lot of work.
Xander: Sometimes I save it, sometimes I get stuff with it.
Elizabeth: He loves Lego sets. He was looking at a $50 Lego set.
Xander: Well, it was a limited edition set. It was Space Police. I thought it was awesome. I started out with 25 bucks, then I worked up to it.
Elizabeth: Early on in the summer, when we instituted this allowance, it was still a relatively new concept for Xander. So we started off with buying him the item that he wanted, then he would work for it. He wouldn't be paid, he'd have to pay it back. We allowed that to happen before, I would say, a month-and-a-half, until he sort of slacked off on his chores and we weren't getting paid back.
So we notified him, like a credit company would, that he was delinquent.
Xander: I was sad.
Elizabeth: And he was sad. And I said, "Well, you're a bad credit risk right now, so you're going to have to earn your money before you can buy anything."
Xander: I don't know what mom means by "credit."
Elizabeth: It's when you buy something first and then have to pay it back.
Xander: Oh yeah.
Elizabeth: So he's been very good, so we may institute some credit again.
Vigeland: Elizabeth and Xander Lord in Durham, N.C.
Comments
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From Grand Rapids, MI, 11/03/2009
Maybe a layaway plan would've been a better move in this case. If you're worried about a limited edition item no longer being available by the time he'd saved up the cash, why not buy it and hold it until he can pay for it in full?
Which is the more desirable lesson: teaching your child to be a good little borrower (i.e. to have good credit), or teaching him not to go into debt to buy things he can't afford?
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