Allowances for Children

Children need to learn about money and what it takes to make it. I think it is a great way to teach them responsibilities. You do not have to give them so much a week but a little. When giving children an allowance, give them the money in denominations that encourage saving. If the amount is $5, give them 5-1-dollar bills and encourage that at least one dollar be set aside in savings. Keeping good records of money saved, invested, or spent is another important skill young people must learn. To make it easy, use 12 envelopes, 1 for each month, with a larger envelope to hold all the envelopes for the year. Establish this system for each child. Encourage children to place receipts from all purchases in the envelopes and keep notes on what they do with their money.

Have your child do house work to earn their money. Taking out the garbage, cleaning the table, putting clothes into the washer, or even helping you wash the fruit and vegetables for dinner. Household chores – If you ask your child to perform certain household duties such as taking out the trash or cleaning his or her bedroom, show your child how to do it (the behavioral steps) and clearly explain your expectations. When children know how to complete a task and take care of their personal belongings, they learn what it means to act responsibly. Children love to help out and be rewarded. Learning about money and the value connected with money is far too important a lesson to attach it to household tasks. And household tasks are far too important to be put in a situation where you take away money as a punishment.”

Give your child the “Chore Money” and an envelope to keep it in. Be sure that your child understands that they are responsible for the money and if they lose it, they start over. Some chores can be cleaning the toilet, wiping off counter tops, sweeping, cleaning draws, putting their clothes away, vacuuming, dusting, putting away silverware and dishes, feeding pets, taking out trash, helping with younger siblings. All chores should be adjusted according to age and ability. Do not expect a young child to do an adult’s job like washing clothes or cutting food.

By the time your child graduates from high school, she should be able to use a credit card responsibly and know the basics of saving and investing. But don’t expect to teach her/him all this in one crash course. Start laying the groundwork early, and explain the value of money little by little. Perhaps the most common form of bad money manners among kids is bragging – the sometimes unstoppable impulse to show off the hot new toy they just got. The ultimate no-no, of course, is to comment on or tease another child about his or her financial situation. Children will also quickly notice that you sometimes use plastic cards to pay and that machines send out cash when you press certain buttons. The savvy among them, when told you cannot afford to buy a toy, will tell you to go to the machine. Such an observation is an opportunity to explain a bank account. You get paid a set amount of money, which goes into an account; the machine coughs out only as much as you have, not as much as you want.