In episode 35 of the FamilyPreneur podcast we meet John Lanza! He has been featured in The New York Times, The Wall Street Journal and The LA Times. He's is the Chief Mammal of The Money Mammals, teaching kids to “Share, Save, & Spend Smart.” I'm excited to explore issues related to money and allowance with John, who recently wrote a new book for parents: The Art of Allowance: A Short, Practical Guide to Raising Money-Smart, Money-Empowered Kids!

The topic of financial literacy is important because we want our kids to develop the skills to make and manage their own money.

John advocates for giving your child an allowance, but not tying it to chores. He sees allowance as a teaching tool, not a hand-out. We should ensure that our kids understand the reason why they are getting an allowance - that we're giving them money so that they can learn lessons such as wants vs. needs, saving for goals, and making smart money choices. Chores teach a different lesson - that you need to work to earn money. He goes into more detail explaining the differences between the two lessons, how he determines what lessons to implement, and how he teaches those lessons.

He shares his recommendation for how much of an allowance you should allocate for each child. He recommends $1 per year of their age - so a 5-year-old receives $5, up to the teen/tween years - then things change.

For all kids, he follows a rule that splits all income into 3 "banks" - Share (charitable giving), Save (for long-term goals), and Spend-Smart (thinking about the money they spend). That being said, he also recommends 3 clear jars - so they can see the money that is accumulating in them.

When it comes to saving, you want to be saving for a goal - not really the idea of saving for a "rainy day." Their first goal should be attainable within 2-6 weeks. They need that more immediate gratification in order to learn the lesson - the idea of a rainy day is too abstract. The goal should follow a "SMART" acronym:

• Specific - Scooter - put a picture on the jar
• Measurable - how much it will cost and how long it will take
• Attainable - it wont take too long and they will be able to purchase it
• Relevant - it's a goal that they want
• Time-based - identify how long it should take

Teens/Tweens (between 10-14 years old) follow a "Breakthrough Allowance." They receive $100/month - but they are responsible for more expenses including: all their clothes, communication (cell phone), birthday/holiday presents for their friends, food out with their friends. It sounds like a lot of money, but when you think about all the money you spend on what they want as you go - it's likely less this way, plus it's teaching them those essential budgeting skills.

Throughout this episode John provides tons of examples and tips and tricks when it comes to helping to raise your kids money-smart. Skills that all of our kids need to develop! I love how he talked about his personal experiences with his kids as they grew from kids to teens and how that process has changed.

I ask him questions about one of my biggest pet peeves - when my kids blow their money on things that I disapprove of - and how parents can teach these skills if they're not confident that they are money-smart themselves.

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