The 50 / 50 Tool

We tried to teach our kids about the difference between things they need and things they want.  My wife and I provided them the things they needed.  Things like clothes, lunch money on a school day, a bike for riding to school, etc.  But what about the things they wanted?  Birthdays and the holiday season only come around once each per year.  We used our 50/50 tool a lot during the rest of the year.

When our kids wanted a _____ (insert seemingly important item that fits the “want” category rather than the “need” category), we told them would split the cost 50/50 with them.  Usually, the item cost more than just a couple of week of saving up their allowance.  This meant that we also had to be ready to offer ways to make money with chores, if they requested.

One great thing about this tool is that it tested how bad our daughter really wanted the item.  It badly enough, they would do whatever it takes to get it.  And with the 50/50 split it was amazing how often their 50% share of the cost was reasonably within reach if they decided to put in some effort to work for the money.  One of our daughters come up with an idea of selling homemade banana bread every weekend morning door-to-door in our neighborhood.  Young entrepreneurial spirit at work.

I personally love the 50/50 rule and witnessed it working exactly as I expected/hoped many times.  It worked for $20 wishes when the kids were in elementary school and extended to $250 wishes when they were in high school.

When our daughters approached the home buying age, we matched their down-payment dollar for dollar on their first home, up to $10K each.  For their weddings, we set a budget that my wife and I would cover and offered to match them dollar for dollar above that, if they wanted a wedding that cost more than our budget.  If the final tally was less than the budget, we split the savings with them 50/50.

Even at adult age, the tool both helped our daughters accomplish something they really wanted and tested themselves on what was really important.

See my other blog posts on parenting here.

Author: Gordon Daugherty

Gordon Daugherty is a best-selling author, seasoned business executive, entrepreneur, startup advisor and investor. He has made more than 200 investments in early-stage companies and has been involved with raising more than $80 million in growth and venture capital. From his 28-year career in high tech, Gordon has both an IPO and a $200-million acquisition exit under his belt. Now, as co-founder and president of Austin’s Capital Factory and as author of the book “Startup Success”, Gordon spends 100 percent of his time educating, advising, and investing in startups. View all posts by Gordon Daugherty