AHA - Allowance mentality = employee mindset

We had a great 'aha' today about financial education.

I was just thinking about my kid's education. Hwei Min and I were discussing on when we should teach our kids to pick up academic skills.

I talked about making learning interesting. We thought about it and realized that maybe the reward system most parents practise (“You get 90 out of hundred for 3 subjects and you will get the latest Superman figurine”) is a way to create short term goals for kids to aim for. In a sick kind of way, it makes learning a little more ‘fun’.

Then I said that I wanted to train our children to like passive income, and we should make the reward passive instead of one off reward.

Suddenly, I realised, isn't child's allowance something like an adult’s paycheck? We go to school to get an allowance. Some kids are not given allowances during school holidays. We go to work to get a paycheck!

If in primary school, we get 5 dollars a week, in secondary school we will get 10 dollars a week. What has changed? Did we study harder? No. We just got older! Now what does that do to our mindset when we start working? We get "greedy"! (Go read "Rich Dad, Poor Dad" for the Rich Dad's definition of greedy)

So here lies a very important lesson which we have yet to grasp. We must really rethink the system in which we teach our kids about life, and about money! Maybe we pay allowance based on performance? Maybe the allowance comes in the form of passive income?