Host: What is meant by "living expenses" and when should they be introduced?
Rene Hackney: Living expenses are seen as the things, the child needs to do with their money throughout the week, something like a seven year old, who maybe needs a dollar a day for lunch at school. If you can identify a living expense like that and add it on to their allowance, it's not that they need to do anymore work to gain that other $5, it's just on Sunday when you give them their allowance for their jobs. You say, "Now here is five extra one dollar bills for you to manage, those are your living expenses, that's your lunch everyday.
So once you give it to that seven or eight year old, it is then up to them to get that dollar to school with them everyday. It teaches them about that living expense and about managing it. Now the idea is, if you are doing that with a seven or eight year old, by the time they are 13 or 14 you might be able to say, "Wow! Last year we spent $250 on your soccer expenses, here is $250 to manage, or here is a $125 for the next six months to manage. So, are giving children real practice at managing that living expense money and that responsibility. It's such a gift to them when they go off to college to have budgeted and to have learned how to manage from a some of that, so, they don t get in over their head.