A Slob Tax?

By Alec Lindenauer, COR Chief Allowance Officer

I’m always learning, and am always open to a great new idea, no matter the source. Despite a career in finance and my focus on raising money savvy kids, I still don’t have all the answers. Frankly, Warren Buffett doesn’t either, and he’s been considered an investing guru forever!

I have much to learn, and recently picked up a great idea from my friend Nora, while Julie and I were interviewing her for our soon-to-be released COR podcast, called How To Teach Your Kids About Money. At the time of our recording, Nora and her husband, Craig, had recently completed just their second COR Day. 

For the uninitiated, that means their second monthly allowance day … complete with conversations around spending, saving, investing and donating. 

As we were talking, Nora was explaining how her husband was having a hard time giving their twins allowance while their rooms were a sloppy mess. As it was described, their 13-year-old twins were leaving their rooms in zoo cage shape. Understandably, Craig didn’t want to reward such behavior. 

As Nora recalled the video lessons in one of our courses, I often stress it’s important to remember why you’re giving allowance in the first place. If it’s to teach your kids about money, then withholding allowance for an incomplete chore sends a different message. Not a wrong message necessarily, just a different one. Perhaps teaches that money is only earned, and never given. If that’s your primary allowance driver, then you’re on the right track. If not, now what?

Craig and Nora came up with a great hybrid solution that I liked very much. And as we talked about it on the podcast, we lovingly named it The Slob Tax.

Instead of forgoing allowance in a month where the kids aren’t being chore compliant, Craig and Nora are making it clear what’s expected, and have detailed the consequences. Any non-compliance with room clean-up now results in a swift and specific money penalty … a Slob Tax. 

As an example, if Nora or Craig notice one of the twins has left laundry on the floor, that might be a $1 penalty. And those penalty amounts are now tallied on their fridge until the following COR Day. And on that COR Day, once the kids are given their money to allocate between their Spend, Save, Invest and Donate buckets, they first have to pay the new tax.

Now where does that accumulated money go at the end of the month? Well, since Craig and Nora pay someone to help clean the house twice a month, those funds directly offset that expense. And importantly … THE KIDS KNOW IT!

They are now participating in the expense of cleanliness … with a Slob Tax. 

 
In the context of raising a money savvy kid, why might a Slob Tax be better than simply withholding allowance? For one, it’s harder for kids to conceptualize and understand abstract lessons, rather than those that are concrete. For example, try teaching your kid about opportunity cost, rather than regular cost. 

Explaining why they didn’t get allowance on allowance day skips all the meaty, important hands-on lessons they would ordinarily learn. If you still take them through the lessons, and they get to experience the pain of tax, you’ve offered a first-hand concrete experiential learning moment.

Those are the kinds of lessons that have a much better chance of modifying behavior. And even if their behavior isn’t modified to your satisfaction, they’ll certainly have a different perspective on the cost of non-compliance. That, and your kid will have still had the opportunity to learn that month about spending, saving, investing and donating with the money they were able to keep.