Money Smart Kids Allowance Tips

SVDCU wants to share tips for teaching children good habits about money management. The information was originally published in Smart Parenting - Money Smart Kids.

Allowance

Experts agree that the very best way to teach money- management skills is to give your kids cash, along with control over how it's handled. Allowances provide hands-on, real-world experience in managing money and teach kids about decision-making, budgeting and the value of saving. 

When and How Much

Start giving an allowance by age 6 or 7. Some parents start even earlier, as soon as their kids learn the different values of coins and bills. Children ages 6 and up, however, usually have a better understanding of money and responsibility. The amount of the allowance should be enough to give your kids practice in spending—but not so much that they won't have to make choices. Some popular weekly formulas are $1 or $.50 for every year of age, or $1 for every year of school (e.g. $3 for a second-grader).

The Chore Debate

Most money experts agree that an allowance should not serve as payment for doing chores. Chores are part of kids' responsibility as members of the family. However, consider paying your kids for extra, more demanding tasks, such as cleaning out the garage. If it's a job you would pay others to do, such as baby-sitting, house painting or washing the car, hire your kids instead. 

Allowance Tips

ü  Pay it regularly and on time, such as every Friday evening.

ü  Give younger kids a weekly allowance, but consider paying teens on a monthly basis to reinforce budgeting skills.

ü  Clearly explain what the allowance is expected to cover. Are your kids supposed to buy school lunches with it? Purchase clothes and gifts? Or is it just for personal entertainment and treats? The amount you provide should realistically cover the anticipated expenses.

ü  Give out the allowance in small denominations. For example, if it's $2, give a $1 bill and four quarters. This teaches young kids money equivalents and helps them divide their income into savings and charity.

ü  Provide guidance, but leave decisions about how the money will be spent up to your kids (except if the proposed purchases are unhealthy, unsafe or contrary to your family's principles).

Allow your kids to make mistakes. These can be powerful learning experiences.

You can teach your children how to save money by partnering with SVDCU. Open an account today with a minimum deposit of $10.00. They then become a member of the "Very Important Kid" Club.

Money Smart Kids Ages 6-10

SVDCU wants to share tips for teaching children good habits about money management. The information was originally published in Smart Parenting - Money Smart Kids.

By age 6, your kids will be ready for an allowance. Begin to stress the importance of saving and help them set specific savings goals, such as a computer game or a new bicycle. Start a savings bank at home for your kids and remind them to add to it regularly. When they're ready, usually at age 9, take them to your credit union to open a savings account. Then, take them each month to make a deposit in their account.

Need vs. Want

Help your 6 to 10-year-olds understand the differ­ence between wants and needs. They often find it hard to resist spending all their money at once on things they don't need. Explain that it's fun to indulge in luxuries now and then, but buying stuff on impulse can leave them with no money when some­thing really important comes along.

But Everyone Else Has It!

A common struggle for parents occurs when their kids want everything "all their friends" have. Reinforce the notion that it's OK and even good to be different. Never feel guilty about not giving your kids everything on their wish list. They can definitely live with­out the latest cool toy or trendy sneakers, and probably will soon get over wanting these things— especially if their home is rich in love, respect and affection—the things kids really need.

Get Them Involved

Start involving your kids in real-life lessons about money. Give them a short list of grocery items to buy, but set a spending limit in advance. They can do their shopping while you do yours. Also, include your kids in family discussions about financial matters. For example, have them help you plan the family vacation: Should you camp or stay in motels?

You can teach your children how to save money by partnering with SVDCU. Open an account today with a minimum deposit of $10.00. They then become a member of the "Very Important Kid" Club.