Teaching Kids about Money

of the biggest challenges facing parents today lies in teaching kids about money. The problem with teaching children about money is that there are so many different opinions about how to go about it. Here are just a few questions that we have to answer.

• Should you give a child an allowance, or tie money to work? What about tying it to grades?
• Should you enforce certain spending rules, or let them do what they want with their own money?
• How much should a child receive?
• How often should a child receive an allowance? Daily, Weekly, Monthly?
• Should teens still receive an allowance when they are old enough to work?
• What should a child have to pay for with his own money?

The good news is that all these are valid questions. The bad news is that there is no one right answer to any of them. However, I have never been shy about giving my opinion, so here are my humble thoughts on the matter.

Teaching That Work Equals Money

In general, I believe that if a child is old enough to have his own spending money, then he is old enough to work for it. So I suggest that you explain to your child that the reason that you have money to give him is because you and his father work for it. Then tell him that you are willing to pay him if he is willing to work. Agree together on the chores and then set a fair, weekly allowance based on what he is doing.

The key, here, is that it is a weekly allowance based on satisfactory performance. If he doesn’t do his job well, try correcting and re-teaching him a few times. However, if he continues not to work, you have the right to “fire” him by cutting off his allowance. When this happens, explain that you will be glad to rehire him when he is willing to work.

Once a child is entering his early teens, it is time for him to branch out toward working for others. As he spends more time earning money, he will have less time to help out around the house. As this happens, his daily chores will become more a part of participating in family life than earning money, and you will want to slowly cut back on his allowance while encouraging to being making the transition to adulthood.

As a teen earns his own money, he will be able to spend it as he likes. For many, this means buying a car. A parent may or may not choose to participate in this transaction. However, it is unlikely that a teen will be able to buy a car on credit unless he has a cosigner. There may be some advantage to co-signing a car loan for your child. For one thing, it will help you keep track of how the teen is spending his money. A friend of mine who handles car title loans in Wilmington, Delaware, says he sees way too many teens come in to borrow money on their cars just to buy something like a new games system or take a trip with their friends.

He Who Has the Gold Makes the Rules

While children are young, we need to teach them to manage their money, just like we teach them to write their names or hit a baseball. This means that parents should set down some rules about how an allowance is to be spent. These rules should cover what the child must pay for himself, how much he should save, and when he is allowed to spend frivolously.

Hopefully, by the time the child is earning his own money, he will have incorporated these skills into his own life. For instance, it would be nice not to have your young adult son or daughter dependent on cash advance payday loans to make it to the next week.

About the Author

Melissa Cameron is a married writer with two young children. She and her husband Dave have been focusing on improving their personal health through diet changes and exercise and love working out together. Melissa’s research into lifestyle changes have resulted in her trying various popular weight-loss programs like Medifast (coupon code), and Nutrisystem (plan review) as well as planning and constructing her own home gym.