find it difficult to guide them in these
lessons, so it might be a good time to
get more informed yourself.
Making allowances?
The decision of whether to give
children an allowance is often a
controversial one. Some parents
connect an allowance or “pocket
money” to household chores, while
others feel that payment shouldn’t be
given for something that should be a
standard contribution to the family
home. Financial guru Suze Orman
says that an allowance, or as she calls
it “work pay”, should be used as a tool
to teach kids about having to work for
money, since that’s how it works in
the real world. A regular allowance
may be given to some children with a
bonus given for things that you might
pay someone else to do, like washing
the car or mowing the lawn. However
you structure it, an allowance can be
used as an important teaching tool.
Here are some things to remember:
• Before giving your child an
allowance, they should understand the
value of each coin and note, and at
least be able to count money.
• Be clear about how much will be
paid and what they will need to buy
themselves. If you want them to buy
their own lunch, expect there to be
times when they will ask for lunch
money as the allowance has been
spent already on other things.
• Expect to negotiate. Children will
always compare notes with their
friends, and if someone is getting more
than they are, they may hit you up for
a raise. Jayne Pearl, author of
Kids and
Money: Giving Them the Savvy to Succeed
Financially
, suggests that you use this as
part of the teaching process. She says,
“Negotiation skills are an important
part of the lesson, which they’re going
to need for dealing effectively with
friends, teachers and, eventually, their
bosses.”
• Encourage saving. Give a certain
amount and agree on the amount that
should be put aside for a rainy day. It
helps if you give them their allowance
in denominations that make it easy
for them to put money aside, like
$50 in $10 notes. If they need help
understanding the concept of saving,
help them to set some goals – both
short- and long-term. Whether it’s a
new video game in a month, or a new
bike in six months, let them decide
what they want to spend their money
on. Remember that it’s their money
to spend as they wish. You can guide
them and discourage them from
wasting it, but give them room to
make mistakes.
• As further incentive for saving part
of the money themselves, offer a
Resources
T
here are a number of websites and apps available for children of every
age to teach them about money. Here are a few to get you started:
/
contribution towards big-ticket items.
Providing a percentage of how much
is saved or matching them dollar for
dollar can really get kids motivated.
There are many fun and engaging
ways to teach your children about
money and how to use it wisely. But
ultimately the biggest lessons they’ll
learn will come from watching you
manage your finances.
October 2013
57
