Tips for Teaching Kids about Money and Finances
| Posted in Bank Blogs
How an allowance can help kids learn about money.
Giving kids an allowance can be a great way to teach them the value of money. Perhaps that’s one reason why so many parents do it. According to a study from T. Rowe Price, about 70 percent of all American kids get an allowance. Here’s what you should know.
Separate Allowance from Chores
For starters, don’t tie allowances to chores. You want your child to learn that being a part of the family means doing their part to contribute through chores. You don’t get paid for emptying the dishwasher, so why should they?
Additional Jobs for Kids
Instead, allowance can be given for additional tasks above and beyond household chores, like:
- Mowing the yard or raking leaves.
- Shoveling walkways and driveways.
- Washing the car.
- Picking up trash in the yard.
- Washing out the trash dumpsters.
- Deep cleaning the bathrooms or the kitchen.
- Clean out the pantry.
- Washing outdoor furniture.
- Doing various organizing projects.
This way, they’ll learn that money is tied to work, not just doing the things they’re supposed to do.
Have the Money Talk
Now that you are giving allowance, use it to spark up discussions about money. As your child grows older, talk to them about budgeting their allowance. One idea is to:
- Let your teen handle the money you were going to spend on back-to-school clothes and supplies.
- Help them with the process.
- If they run out of money but still want new jeans, they’ll need to earn more or adjust their budget.
- Allow them to make mistakes to learn from.
Teach Good Money Habits
Remember that — above all — giving an allowance is a chance to teach money habits that can last.
- Stress the importance of saving some of that money, so the idea of savings is set early in your kid’s life.
- Teach basic budgeting skills.
- Take them with you to the store so they understand the cost of everyday items.
Do One Thing: Search for ways to talk about money every day. The more your kids understand, the better off they’ll be.
Author: Chris O'Shea