I gave my child a finance loan for a play station and it taught him some invaluable life lessons….
Just after Christmas a year or two back, my son Oliver (who had just finished grade 5 at the time) decided he wanted a new PlayStation 4 (he already had a PlayStation 3 and an Xbox). Christmas had just finished and Oliver had already received the gifts which he asked for, so there was NO WAY I was going to buy an additional gift for no reason.
After a number of discussions (and arguing and moaning on his part), I put it to Oliver that I would write him a loan agreement where I would purchase the new PlayStation for him, and he would need to pay the money back to me. Yes, I drew up a Finance Loan for my child.
A contract was drawn up and signed, and I once again I had a very happy child. Of course, I had strict rules. They were:
‘Mums rules of finance’ were:
- NOBODY gets paid for doing a bad job, so make sure your jobs well and with pride (no matter how small the job is)
- If you do a bad job then mum will retrain you – if you continue doing a bad job then you won’t get paid (life rule – you lose your job)
- You do NOT get paid for doing Household chores – like tidying your room or setting the table – this is considered contributing to the family.
- Minimum wage only is paid (you are a child)
Next, I had a payment table for the jobs he would be doing. I printed it out and put it up in the kitchen so everyone could see it. Here is a copy:
Each time money was earnt it was added a chalkboard in the kitchen. At the end of the month I totalled the amount, and after making his loan repayment towards the new Play Station, Oliver had the option of taking the extra money, making additional payments on his loan, or leaving it to roll over into the next month. This was totally his decision, as it was his money.
Oliver was determined to pay off his new PlayStation, so chose to pay the extra off his loan. Not only did he pay off his new PlayStation in record time. In fact, now, he is on his third loan, this time is paying off a fancy bike that was quite a bit more than the PlayStation was.
Copy of Loan Agreement:
Here is the copy I used, please feel free to download and use it! Look this worked great for our family – but you need to stick strictly to the rules… but by allowing him this, he has really grown up and has taught himself about money!Guest Article from Future Funding