27 Oct When your kid’s friends are richer than you

Q. Preaching “income inequality,” my 10-year-old said his $5 per week allowance is lower than all his friends. What’s fair, and what are the teaching money moments here?
— Mom

A. Oh, brother.

We’d consider giving your kid a one-time bonus for being so aware of the hot button issues of the day. But a raise? Just because his friends earn more? Probably not.

“Get new friends that don’t come from rich families as it will ruin your kid!” joked Jerry Lynch, a certified financial planner with JFL Total Wealth Management in Boonton.

Well, Lynch was only sort of kidding.

He said he’s a fan of allowances because children learn that when they spend everything, it’s gone.

“When my three boys come up to me and ask me for an increase, I ask them what more they can do to make my life — or more importantly, my wife’s life — a little easier,” he said. “The only way I will pay them more is if they do more. I will not overpay them.”

So, he said, if his middle son already cuts the lawn and wants more money, sure. But he’d have to do the trimming, too. If the youngest, who cleans the kitchen, also wants more, sure. But he has to also load the dishwasher and take out the trash.

“In the real world with us big people, the only way you get a raise is making life easier for your boss,” Lynch said. “If you can make them more money or free up their time, you can get a raise.”

“You will never get a raise because you’re alive and kids need to learn that early or they will never get ahead,” Lynch said.

Brian Power, a certified financial planner with Gateway Financial in Westfield, said there’s a not only a financial lesson here, but a family values lesson, too.

He said you can start by reviewing hourly rates of different jobs in the marketplace, such as what you pay your babysitter or what the folks working at McDonald’s earn. You can compare the importance of the jobs relative to their hourly rate.

“If your 10-year-old is spending one hour per week helping with chores and they’re simple chores — taking out the trash, emptying the dishwasher — the $5 per week may be in line,” Power said. “If your child is spending more than an hour a week on chores and they’re more meaningful chores like cutting the grass, you may be underpaying your child.”

Power said some families provide an allowance that is not tied to chores. The family might feel that all family members are responsible for certain chores such as cleaning their room or doing their own laundry as an everyday responsibility.

“If the allowance is not tied to chores, then the conversation should be more about your family values and what you as parents can afford to pay as an allowance,” Power said. “Maybe your child’s friends are wealthier or there are fewer children in their families so they can afford more per week.”

If your child’s friends do come from wealthier families, you’ve got an opportunity to talk about “Keeping up with the Joneses” in addition to discussing what a job might be worth. If you simply can’t afford to pay more, explain that you, as a parent, can only pay what you can afford.

It’s also a chance to talk to your children about taxes, and what part of a paycheck you actually get to keep.

And while they watch friends flashing around extra cash, it’s an opportunity to explain that someone isn’t rich just because they appear to be. Behind the expensive clothes and the spiffy car may be a crushing load of credit card debt.

It’s good preparation for when your kid, as a teenager, wants an $80 pair of jeans.

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This story was first posted in October 2015.