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Few topics in personal finance evoke such strong emotions as the question of whether or not a kid’s allowance should be tied to chores. People have feelings about this.

I’ve heard many reasonable arguments on both sides of the debate. In the pro-chores camp: We all work for money, kids should learn to do the same. In the no-chores camp: I don’t get paid to wash the dishes, make my bed or rake the leaves. Kids’ should learn to do their share of housekeeping because they’re part of the family.

I’d like to offer an alternative point of view from Clifton Corbin’s recent book Your Kids, Their Money: A Parent’s Guide to Raising Financially Literate Children. Mr. Corbin, a financial literacy advocate with a background in business consulting, argues that the primary purpose of an allowance should be to teach kids about money. Just think of it as driving lessons, he writes.

“Consider small amounts of cash as their parking lot. A safe, confined space to make mistakes. … They are still holding the wheel, making financial decisions, but poor judgment will not cause damaging repercussions like missed bills or creditors starting to call.”

The allowance-for-chores approach becomes problematic when your child is fine with forgoing their pay, according to Mr. Corbin. You can’t fire them, so odds are you’ll be left to pick up the slack, and they won’t get to practice with their money. Kids should, of course, also learn about earning, but summer jobs can take care of that lesson, he writes.

Given my six-year-old’s track record of disdainfully declining candies for chores – simply talking to him about shared responsibility yields better results – I decided to go with Mr. Corbin’s approach. My kid has been getting $2 a week for a couple of months now, and his understanding of money has already made a huge leap forward.

Granted, I still get questions like: “Does our house cost more or less than $100?” But after a trip to the store in which he realized just how little he could buy with $5 (poor guy doesn’t know yet about the worst inflation rate in four decades), his grasp of smaller amounts of money has noticeably improved.

Case in point: The other day he asked if he could buy an upgraded spaceship for an aliens video game he’s been playing. When I pointed out the price tag – which was, I kid you not, $34 – he looked at me in shock. Without further ado, he closed the in-app purchase window, and that was the end of it.

It was a proud parenting moment.

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Erica’s personal finance reading list

How much money would it cost to live your best life?

An interesting article looking at a recent study in which researchers asked survey participants to think about how much money they’d need to live their dream life. Ask to pick any amount between $10,000 to $100 billion, most people chose relatively modest amounts of between $1-million to $10-million. The authors argue the results raise questions about the assumption that we’d all choose unlimited consumption if we could. Personally, I wonder if the findings aren’t simply evidence that many of us struggle to grasp that even $10-million isn’t a huge amount when spread out over a lifetime.

On the ‘die with zero’ retirement philosophy

Bridget Casey, who is a freelance columnist for the Globe, writes about how Die with Zero by Bill Perkins changed her outlook on retirement. The goal is to die with zero dollars in the bank.

Mixing RESPs and TFSAs

On a more nitty-gritty but timely personal finance topic, this Morningstar article looks at how parents can turbocharge the tax efficiency of their kids education savings by combining registered education savings plans and tax free savings accounts.

How to present a caregiving break in your resume

The tongue-in-cheek blog Bitches Get Riches tackles an important but rarely addressed topic: What to do if you had to put your career on hold to take care of someone else and now have a gaping hole in your resume. (Warning: If profanities and GIFs bother you, you may want to skip this one. No judgement here.)

Products that caught my attention: The Apple AirTag

Those key-finder thingies? They can help you locate your lost luggage, among other things, according to one savvy traveller. It’s a smart idea, although you may find much cheaper alternatives from other brands.

LinkedIn post of the week

In light of the recent boost to old age security (OAS) payments for those aged 75 and up, Calgary-based financial planner Aaron Hector has this “unofficial” summary of benefit amounts and clawback ranges. One takeaway according to Mr. Hector: “This further enhances the benefits of OAS deferral for high income retirees who expect their retirement income to routinely fall within the clawback zone.”

The money-free zone

I’m not a horror movie fan. My tolerance for gore is extremely low and I don’t deal well with ominous suspense either. My first time watching The Shining – for my husband’s sake – was in broad daylight and I had to take three breaks to calm myself down. So let me assure you that The Rental is quite PG as horror-thrillers go. Don’t be fooled by the low ratings, since horror never does well with ratings. This satyrical take on the hipster ethos is highly entertaining.

Callout alert

This Kitchener woman, 35, with zero debt dreams of buying a house. Although she has savings of $179,000, is finding the housing market too competitive in Kitchener and feels like she might have to rent for the rest of her life. Here’s our latest paycheque project, a non-judgemental look at how millennials and Gen Z’s are spending their monthly earning. If you would like to participate, send us an e-mail.


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