Teaching Kids About Money

Teaching Kids About Money

Start Young, Give Allowance Early in the Week, and Stress Savings

Of the many required tasks parents confront raising their children, educating them about money and sound personal finance is on any list. Should you give your child in allowance? At what age? How much? What should kids pay for? Should you pay your children for doing jobs around the house? Here’s what the experts advise.

To Give or Not to Give?

Not all experts agree that children should get an allowance. Proponents say an allowance is a good way to teach kids how to handle money responsibly and to show them that they are working members of the family. Critics argue that an allowance creates a welfare system in which parents provide spending money. Most experts agree, though, that parents who choose to give their kids allowances should not offer it as payment for chores or withhold it as a punishment. Chores should be part of the child’s family duty, they say. And parents who want to discipline a child should take away privileges other than an allowance.

One Plaza, NYPD. Photo by Elena.

As the age-old debate rages on, about one-half of the kids in the United States get an allowance. Paticia Schiff Estess and Irving Barocas, authors of Kids, Money & Values, offer these tips for parents who give their kids an allowance:

• Start an allowance when a child starts elementary school. School signals the beginning of important responsibilities for children.
• Set a specific time when money is distributed and stick to it. Being late implies it’s OK to be irresponsible.
• Distribute allowance at the beginning of or in the middle of the week. Most kids spend most of their money on the weekend. Giving early in the week forces them to think about how they’ll spend it later.