11 Tips for Teaching Kids About Money from Discover {sponsored}

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Teaching kids to be responsible with money and teaching them how to be fiscally responsible is a huge challenge. From the moment they are able to ask for things there are opportunities to teach kids about how to manage their money. It doesn’t matter if they’re 3 or 13 there’s always more to discuss.

As a mom of four I have a few tips and tricks up my sleeve. Below you’ll find 11 tips to help you teach your kids about money.

11 Tips for Teaching Kids About Money

11 tips to teach kids about money

  1. Set family goals. Setting family goals will help you work together as a team to spend less, save more, and achieve family goals. Younger kids may have small suggestions like saving up to go to the movies while older kids may want family goals to be larger like saving for a week long vacation.
  1. Start a family piggy bank. From a young age kids love to find money, count it, and save it. Create a family piggy bank to save for something everyone wants like a swing set for the backyard or a trip somewhere special. We’ve saved for a number of family goals this way and even if the savings don’t cover the full cost it certainly helps!
  1. Teach kids how to find the best prices. Savings can be significant when you hunt down the best price. Help kids shop for the best price by starting at the grocery store. When our kids were preschoolers I gave them a budget for items like a snack food or a box of cereal. Then we could move on to back to school shopping or clothes shopping. They’ve learned to research and hunt for better deals on whatever they want to buy.
  1. Teach the difference between cash, credit, and checks. Since we use credit more than cash now the differences may not be as obvious to kids. It’s important for them to understand the benefits and drawbacks of all three.
  1. Show them your pay stubs. For older kids it’s important to share the nuts and bolts of managing money. While it may be unusual to show your kids your pay stubs it can be an important tool for teaching kids. Then they understand how much of your paycheck goes to some guy called FICA.
  1. Share the family budget. Likewise sharing the full family budget can be incredibly eye opening for kids. $1,000 may seem like a lot of money until they realize that you spend that much on your mortgage each month.
  1. Start a bank account for tweens and teens. Tweens and teens should have a bank account and an attached savings account to help them manage their own money. Check with your local bank and find out what options they offer.
  1. Share the magic of interest. The magic of interest can be a big motivator to save from a young age. Recognizing that money can grow can be a game changer for kids.
  1. Have kids track stocks. While it may not be financially sensible to actually purchase stocks, allowing kids to follow a stock and track its’ growth can be a great way to teach them about the stock market and investments.
  1. Talk college costs with older kids. College costs are rising and most families can’t keep pace with their college savings. It’s important to talk to your kids as they get older about what you can and can’t cover, options they may have, and their own thoughts on their education. There are many options and ways to cut costs, but the key is to be clear about what costs you can and can’t cover.
  1. Help your school teach fiscal fitness. If your school doesn’t currently have a financial curriculum in place share the Discover Pathway to Success program with them. You can help your school apply for a grant.

Resources to learn more:

Discover’s Pathway to Financial Success Program has great resources to help guide your discussion, teach kids, and a curriculum for schools, too. You’ll find videos on how to talk to your kids about money, resources for parents on being a good financial role model, games for kids to play, and suggestions for teachers and schools.

What tips do you have for talking to your kids about money?

Kelly

Disclosure: This post is sponsored by Discover as part of the Discover Preferred Network.

The Opposite of Spoiled: Book of the Week

Do you love to read as much as I do? Starting now (as in today!) I’ll be sharing a new book each week. I often have requests from authors and their publishing houses to share and review books. If I said ‘yes’ to them all I’d be drowning in books! Instead I’ll be sharing info about the books, links to where to buy them, occasionally interviews form the authors themselves, and I’ll be giving away a copy (or more) of each book to email subscribers! (sign up for our email list right here)

The Opposite of Spoiled

When I started educating myself about personal finance it was only natural for my kids to catch on. Finding ways to teach them personal finance basics and help them learn to be savers is so important. I’m encouraging them to make mistakes now before the stakes are higher and more expensive. I’ve written about everything from allowances to birthday spending, but I haven’t covered it all. That’s where The Opposite of Spoiled comes in. Ron Lieber, a writer for the New York Times, crafted this must-read book for parents who want to teach their kids fiscal responsibility.

About the book & author

For many parents, conversations with their kids about money can be as awkward as talking about sex. The New York Times “Your Money” columnist Ron Lieber—a parent himself—says that if we have our kids’ best interests at heart, we need to shatter the taboos around talking with them about money.

The award-winning writer offers a persuasive parenting manifesto filled with solid, tested advice on how to help our children make better financial decisions, develop better habits, and acquire the tools they’ll need to grow into grounded young adults with good values and habits. With a warm, personal touch and stories drawn from families with a wide range of incomes, Lieber combines a practical financial primer with a foundation of values and virtues, tackling all of the basics: the tooth fairy, allowance, chores, charity, savings, birthdays, holidays, cell phones, checking accounts, clothing, cars, part-time jobs and college.

In the book, Lieber answers some of the most pressing questions that parents have about money, from the toddler years until their kids go away to college, such as:

  • Should you tell your kids how much money you make?
  • What’s the point of an allowance, and what should the terms be?
  • Should every child work — and pay for some of college themselves?
  • How do you explain why some friends have more money and some have less?
  • What’s the best way to make giving a family activity?
  • When does a child tip over into materialism, and what can you do about it?

Want a preview of what you’ll learn in the book? Read this thought-provoking piece from the New York Times, “Why You Should Tell Your Children How Much You Make.”

Enter the giveaway

Sign up for our email list right here and get learn how to enter to win.

Buy the book

Purchase The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, and Smart About Money at your local bookseller or Amazon.com.

Kelly

Kids and Allowance: Don’t Let Your Kids ‘Rob’ You

Don't let your kids 'rob' you

“Can I have that, pllllleeeeeasssse?” As a parent, how often have we heard that familiar phrase? If you don’t have kids, I’m sure you remember a time you berated your parents for a prized possession. At times we may give in, and other times we brace for the tantrum that is sure to follow the word, “No.”

Whether your child is 17 or 2, chances are they’ve asked you to buy them things. Giving in to all those wants can set you up for financial disaster, and teach your children the wrong message about money.

What’s a parent to do? Give them an allowance, of course!

Once the word allowance enters your mind there are several questions that follow:

  • Should the allowance be given freely OR tied to chores?
  • Should I only pay for extra chores?
  • How much money should I give my kid?
  • Should I let them spend it on what they want OR should I force them to save a portion of it?
  • Coins, bills, or a savings account?
  • How often should I give him/her allowance?

Allowance Approaches
There are various approaches to giving an allowance. Some parents believe every child should do basic chores without pay (making the bed, clearing the table after dinner, etc.) and offer extra chores for pay.

Other families give an allowance weekly, or monthly that is not tied to chores. It’s meant to be a tool to teach money management.

Still others will use a combination of both. Sticker charts, checklists, and to do lists are becoming a more popular option as well.

What approach should you use? There is no one right answer. It’s just what works for you and your child(ren). You may even need a trial period to see if your ideas work with your kids.

Basics of Allowances
The important thing here is to put actual money into your kid’s hands and to teach them how budgeting works. Many adults carry baggage about money, and most often it stems from lessons we learned as children. Most often these are unintentional messages that our parent’s sent about how they felt about money. By showing them how to mange money now you may very well help your kids avoid money mistakes that so many young people make.

Be Honest
Opening up to your kids about working, money, and your bad habits is key. For instance, when you go grocery shopping you take a list, if the kids tag along have them be responsible for a portion of the list. Perhaps cereal is on the list. Show your child the prices and give them a number you want to spend, and let them choose. Or maybe you need milk. Point out the difference in price between a half-gallon and a gallon, and why you choose the size you get.

How much should I give my child? And how frequently?
Many families give a small amount a week, and increase it as their child gets older. By the time your child is a teen, they should be able to handle their back to school spending, and a monthly budget.

Typically it is best to pay a young child weekly, or every other week, and an older child should get used to being paid on a monthly schedule.

Where should my child keep their money?
When they are very young you can encourage them to save their change in a piggy bank or change jar, and to give their coins as donations to church or to charity. Dollars can be kept in a wallet, or in the mom or dad’s wallet for safekeeping.

Around age 8 or so most kids are ready to set up a savings account. Choose a bank you can walk into, so your child gets the experience of handing over their money, and figuring out how a bank works. You can save money automatically for them, and take half of the cash they might receive on birthdays and at holidays into their savings account. Setting up an agreed upon percentage is a great way to make sure that they’re saving. For instance with my oldest son we had him save all his salary from his summer job while all his tips was spending money.

Many banks offer incentives for young children to sign up for savings accounts to get them started with $10 or $20.

What Our Family Does
We pay our kids bi-weekly an amount equal to their age. We used to take them shopping on payday, but quickly learned by doing so we were teaching them to spend every dime. The kids use wallets to hold their cash, and take them along when we go out, but now we track their money and give them cash when they need it. They end up saving more this way.

Our oldest also has a SpendSmart pre-paid debit card that we automatically put half his monthly allowance into. The other half goes directly to his savings account. This allows him to spend freely, we can track it via text message or email, and he can never overdraw his account.

We do not pay our kids based on chores. Chores are an expected part of life, and since mom and dad don’t get paid for chores neither do the kids. I will pay extra for chores that are outside the norm. A quarter for picking up a bucket of pinecones, $1/bag for the older kids to rack up leaves and put them in a bag, etc.

We also have a family change jar. The family change jar helped us pay for a swingset, pay for a (small) portion of our DisneyWorld trip, and more. Everyone is motivated since we all benefit from the savings.

The kids are responsible for a budget when shopping. For instance when the kids go back to school they get a set budget to spend on supplies and clothing.

No matter what you choose to do teaching your kids to be responsible and understand money is a valuable life skill, and they will quickly learn they can’t ‘rob’ your money since they have their own to spend.

What about your family, how do you deal with allowances? Do you use an allowance as a springboard for talking to kids about money?

Kelly

Dinorama App: Teaching Kids Money Skills

The makers of Dinorama  asked me to try out their app since they knew my readers and I would love it, and I think they’re right! Dinorama is an app that’s designed to teach young kids money management and savvy saving skills. It’s not only a fun app, but it teaches tons of valuable skills. My favorite part though? NO advertising, and NO in-app purchases!  While we have our settings turned off (so the kids can’t make in-app purchases anyway) it’s a nice change to have an app that’s not encouraging spending more.
Dinorama Park

The app has quickly become a go-to favorite in our house. No, I did not play it myself for hours….okay, I did. Both because I love to test out stuff before I hand it over to the kids, and because it was so much fun!

What is  Dinorama?

Dinorama is an iPad app that helps you design and care for your own dinosaur park. The idea and execution are simple, but it offers hours of playtime and learning fun.  While there are loads of features I’ll share the reason it’s a great fit for the blog is because it teaches kids about saving and making smart investments.

Here’s how it works.
You have your own Dinosaur Park. To start you’re walked through how to set up your park, care for your animals, and how you earn money and stickers. Money is the currency you use to purchase new attractions or pet dinos for your park, as well as feed your animals and care for their habitats. You can also earn money through attractions like a photo booth, café, and even upgrades to your dinosaur’s habitats. Stickers are collected to open new ‘shelves’ in the store where you can purchase habitat upgrades, attractions like a balloon stand, and hire workers like a tour guide for your park.

Customize your park.

Customizable park features include picking the names and colors of your dinosaurs, choosing upgrades to their habitats (which can also earn you additional money from visitors), and choosing where and what attractions you’d like in your park.

Take care of your dinos and park.

Dinorama Fixing Habitat
Caretaking  is a big part of the app as well. You have to maintain the habitats by scooping poo, cutting down webs, and fixing leaks. You also have to feed your dinos on a regular basis. A nice touch was that healthy foods give the animals energy while ‘treats’ get the dinosaurs to do a trick.

While kids will learn a lot about caretaking the main goal of Dinorama is to help kids learn to save more and spend wisely. Learning about dinosaurs is just the icing on the cake!

Learn to save and spend wisely.
To teach kids to weigh the savings they get from spending more the app uses some clever devices. For instance if you have a popcorn stand you can refill the popcorn stand with 15, 30, or 65 bags. The more you buy, the larger your profit. If you leave the popcorn stand unstocked, potential visitors won’t visit which means you won’t  receive  their admission. Thus the key to running a successful and profitable park then is to save up and purchase larger refills for bigger profits.

Dinorama restock attractions

Additionally there is a piggy bank that you can use to increase your savings. If you save more, you get more interest. It takes longer, but kids will soon learn it’s better to save for the long haul.

Dinorama Savings Bank

Money Skills Dinorama Teaches

Savings is rewarded.  The more you save and the longer you wait for your returns, the more you earn. This teaches kids about compound interest and long-term investing.

Profit margins are higher the more you spend. Whether it’s buying in bulk or making larger investments, kids are learning that buying in bulk can get you larger profits.

Managing multiple ‘assets’ requires attention to detail. Not only do kids have to keep their dinosaurs fed and happy, but they also have to stock stands at their park to ensure guests visit.

Know when to spend and when to save. The app quickly teaches you that overspending will lead to unhappy visitors and dinosaurs. Kids will learn that they have to maintain everything without overspending.

Save for a rainy day. You literally have to save for a rainy day in this app! When it rains, less visitors show up to your park, so you have to save up for those times to ensure you still have funds for stocking your park, and feeding your animals.

Maintenance is key. Without maintenance of the dino habitats and the park’s attractions you won’t earn as much.

Dinorama Reviews:

Dinorama Park 2

My Review:
This is a must-have app for teaching kids money skills in the guise of an app that’s fun to play! Any young child that loves app play and/or dinosaurs will love this app. Since the app is new I offered the makers my opinion and will share with you as well.  I’d love to see is a ‘login’ screen so multiple kids (ahem, and adults) can have their own parks. As it is now the app only allows you to create one park which cold making sharing tough. While most of the app is picture-based and easy enough for a non-reader to understand, there are some text portions. The text is shown, not read outloud which could make it tougher for non-readers. I helped my first grader read through the instructions anyway, but he had to ask me to read some of the tougher words the tour guide shared as well. Overall though those slight issues are easily improved in the later versions, and the app itself gets two big thumbs up from me.

Kids’ Review:

Aidan says, “I love that I can name my dinosaurs and pick their colors! That’s fun.” He also shared, “I was sad the first time my dinosaur ran away (from not caring for it), but then I learned how to care for them, and now they’re all happy. See, this guy is eating his broccoli trees right now.”

Audrey says, “I like everything about this! I love to save in the piggy bank, but I really like running the park and getting to pick everything that goes here.”

The bottom line:

All the  activities  in the app translate into some great conversations with kids about saving, spending, investing, and other money skills. It will open up discussions about spending smarter, saving for a rainy day, and more. If you have an iPad this app is a must-have.

Right now the app is on sale for only $1.99, that’s 60% off the regular price! You can learn more and download the Dinorama app on iTunes.

Kelly

Disclosure: Dinorama gifted me the app to try and compensated me for my time, but all opinions (and fun had!) are my own.  

How to Teach Kids About Money: Guest Post

I have noticed somewhat of a disturbing epidemic going on in my hometown lately. No, it’s not a medical disease or plague, but it is something that I am very concerned about, and it seems to be affecting many more children today than it did in the not-so-distant past. Children seem to know nothing about money anymore.

Money is Handed to Them

I understand the thought process of parents. I really do. They grew up with only a couple of toys and lost much of their childhood days because they had to work and help provide for the rest of the family. They don’t want their kids to suffer like they did.

So, what do they do? They hand over cash to their children who did absolutely nothing to deserve it. They love the bright-eyed smile they get when their kids see them reaching for their wallet (or purse for you moms out there). The only problem is, they are hindering the future of their children because they know nothing about how that money got into your pocket!

Why Don’t Kids Work Anymore

IMG_2285
Creative Commons License photo credit: KrissZPhotography

Kids can’t find jobs anymore – there are age restrictions.

My older brother is currently 35 years old. When he was a kid (I think as young as 8 years old), he could pick blueberries in the summer time to earn some extra money.    I wasn’t able to find a job until I was 14 (I worked in the local greenhouses, trimming plants). Today, kids can’t get a job until they are at least 16! This makes it pretty tough for them to save up for a car!

So, How Can You Teach Them About Money?

  • In order for kids to learn about money, they’ll have to earn some money. Here are some great ideas from a few parents I’ve spoken with.
  • First and foremost, make sure that your children are doing chores pro bono (that’s right, no money). They need to learn about household responsibility before they can begin to respect their finances.
  • Reward your child for reading certain leadership or finance books (your choice of titles)
  • Encourage them to brainstorm some money-making ideas: mowing the neighbors’ yard, washing windows, weeding the landscape, washing cars, etc.
  • They can earn money online. There are kids today that can program Apps in a few hours. Or they could start there own blog from their interests. There are lots of options online.
  • Create a business venture yourself, and offer them some compensation for their help.

Kid’s Will Respect What They Earn

It’s amazing how much better kids take care of something that they paid for. I personally saved up enough money to buy a truck when I was 16 years old. It wasn’t brand new (it actually had 172,000 miles on it when I bought it), and it didn’t impress my friends, but I loved that truck. The kids that got trucks from their parents took them to Silver Lake and beat them up on the dunes. Personally, I didn’t go anywhere near Silver Lake. I knew that if I broke something on my truck, it was my bill.

Are you teaching your children about money? Have they responded well to something that I have not mentioned? What jobs can kids still do at a young age?

Derek

This is a guest post written by Derek from  Life And My Finances. Derek currently has his degree in Finance and enjoys writing fresh, new financial ideas on his website. The purpose of his site is to help people “Get Out of Debt, Save Money, and Be Rich.”

Is giving always a good thing?

My kids have been saving money for months. A portion of their allowance goes to long-term savings, a portion goes to giving, and a bunch goes to saving for our upcoming vacation. We do the accounting online, so they rarely touch a dollar bill. For our kids this works, since otherwise the cash ends up being spent immediately on toys and trinkets that get used up or ruined. While I’m not opposed to them spending their money on trinkets, we just have too much stuff so this setup works well for us.

Occasionally they come across a dollar bill, or scoop up Dad’s change for themselves. My 7 year old in particular loves to pilfer the change and add it up in her Zillionz piggy bank. (it keeps track of the number on the top, and she loves seeing that number go up) She somehow managed to save up $4.58 and this morning announced that she was taking in two dollars (from the tooth fairy) to buy something from the school store for her friend and maybe herself if something caught her eye.

When I asked her about buying her friend a pencil/pen (no idea what this is, by the way) she said she was doing it because her friend didn’t bring in money for the school store, and she said she’d buy her one.

In the morning rush it was hard to tease out if it was that her friend had asked her to buy it, or she had offered, but I almost stopped her from taking the money in to school. I decided it was probably just my grumpy morning self talking, and let her go ahead.

I debated it a bit because she has a very generous spirit in ways. While she can stand up fro herself, she isn’t very attached to stuff. Maybe it was having older siblings who were, or maybe it’s just who she is, or a little of both, but she has always been more than willing to give something up if it makes someone else happy 90% of the time.

I am trying to find a balance for each of my very different kids between giving and generosity (which we encourage whole heartedly) and giving too much. It’s a balance I myself still try to learn, and one I hear echoed again and again by other parents, particularly moms.

When is giving not a good thing?

How can we teach our kids to give what they can (and it doesn’t need to be financial) while taking care of themselves first?

Those are the questions I struggled with half awake this morning getting her off to school. At the end of the day I still don’t have any answers.

What about you? Do you give too much? Do you feel like your kids (if you have them) are learning balanced giving? I would love to hear your thoughts.

Kelly

Update: Audrey came home with a lovely thank you note and a little gift package today from her friend. I think I must be too cynical sometimes. She promptly took her things to her room so none of the other kids would pilfer her treasures. Smart girl.

Savvy savings products for kids

One of my most popular posts of all time is Kids and Allowance. As parents we don’t just struggle to manage our own finances, but we want to teach our kids smart money saving strategies.

We want them to grow up and learn how to manage money without making the stupid mistakes we made or make. It’s a tough balance though, kids need to make their own mistakes to learn, so what’s a parent to do?

I highly recommend an allowance for kids. You can set up allowances in a number of ways, but try not to get too hung up on what’s right and wrong. Do what makes sense to you and your partner or spouse, and don’t be afraid to change things if it doesn’t work.

For younger kids (age 2-7) I recommend giving them a small amount of money each week or month and making sure they have a place to stash their cash. Typically kids are really into coins too, and you’ll need something special to store them. While you can buy lots of different piggy banks, I really love this Money Savvy Generation piggy bank. It has slots for Save, Spend, Donate, and Invest. While they may not understand the concepts at first try having them give their change to a cause they care about, or “investing” with the bank of mom and dad (try paying them 10% interest every month).

For the next 3 days, the piggy bank is on sale through Savvy Source. It retails for $20, but with this discount you can get it for $10.

For older kids (I recommend 8 and up) I highly recommend FamZoo. FamZoo is like Mint for kids. It looks like an online bank, but you can create payments, and manage money for everything from allowances to specific chores with their interface. It also allows kids to set aside a percentage of their money for things like long term savings, and charity. One of the main reasons I like FamZoo is that when you put cash into kids’ (and really most adults’) hands they are more liable to spend it.

FamZoo has a monthly fee, but you can sign up with a 3 month trial with coupon code CENTSIBLESAVINGS, that way you can try before you buy.

Using FamZoo over the last few months has allowed my family to keep track of the kids’ allowances online, and has encouraged them to save more. It’s also been useful for seeing how long it will take to save for a particular goal, and how quickly their money is growing.

The money isn’t “real”, it’s meant to mirror what a real online bank looks like, so you won’t actually be giving them your money or handing over passwords to bank accounts to your kids.

Once your children reach the age where they always have their hand out it can be a useful tool to show them how much they are really spending, and how much time it takes for them to earn that $10 they just blew on magazines.

These are just two of the products we’ve used and loved. Have you found any products that are helpful in teaching kids money smarts?

Kelly

Disclosure: The link to the Money Savvy Pig is an affiliate link which means I get some pennies for every purchase made. FamZoo is a client of my consulting business.

Kids and Allowance

Can I have that, please???

As a parent, how often have we heard that familiar phrase? If you don’t have kids, I’m sure you remember a time you berated your parents for a prized possession. At times we may give in, and other times we brace for the tantrum that is sure to follow the word, “No.”

Whether your child is 17 or 2, chances are they’ve asked you to buy them things. Giving in to all those wants can set you up for financial disaster, and teach your children the wrong message about money.

What’s a parent to do? Give them an allowance, of course!

Once the word allowance enters your mind there are several questions that follow:

  • Should the allowance be given freely OR tied to chores?
  • Should I only pay for extra chores?
  • How much money should I give my kid?
  • Should I let them spend it on what they want OR should I force them to save a portion of it?
  • Coins, bills, or a savings account?
  • How often should I give him/her allowance?

I’m sure you can come up with at least 1/2 dozen more!

There are various approaches to giving an allowance. Some parents believe every child should do basic chores without pay (making the bed, clearing the table after dinner, etc.) and offer extra chores for pay. Other families give an allowance weekly, or monthly that is not tied to chores. Still others will use a combination of both. Sticker charts, checklists, and to do lists are becoming a more popular option as well.

There is no right approach. It’s just what works for you. You may need a trial period to see if your ideas work with your kids.

The important thing here is to put actual money into your kid’s hands and to teach them how budgeting works. Many adults carry baggage about money, and most often it stems from lessons we learned as children. Most often these are unintentional messages that our parent’s sent about how they felt about money.

Opening up to your kids about working, money, and your bad habits is key. For instance when you go grocery shopping you take a list, if the kids tag along have them be responsible for a portion of the list. Perhaps cereal is on the list. Show your child the prices and give them a number you want to spend, and let them choose. Or maybe you need milk. Point out the difference in price between a half-gallon and a gallon, and why you choose the size you get. For us, it’s because we go through a lot of milk, for other families it may be that a gallon is too much, and they would be wasting their money.

Two of the most frequently asked questions about allowance are:

How much should I give my child? And how frequently?

Many families give a small amount a week, and increase it as their child gets older. By the time your child is a teen, they should be able to handle their back to school spending, and a monthly budget.

Typically it is best to pay a young child weekly, or every other week, and an older child should get used to being paid on a monthly schedule.

Where should my child keep their money?
When they are very young you can encourage them to save their change in a piggy bank or change jar, and to give their coins as donations to church or to charity. Dollars can be kept in a wallet, or in the mom or dad’s wallet for safekeeping.

You can save money automatically for them, and take half of the cash they might receive on birthdays and at holidays into their savings account.

Around age 8 or so most kids are ready to set up a savings account. Choose a bank you can walk into, so your child gets the experience of handing over their money, and figuring out how a bank works.

Many banks offer incentives such as summer reading programs where they will put $10 into your child’s account.

What my family does
In my family of 6, we pay our kids bi-weekly an amount equal to their age. We used to take them shopping on payday, but quickly learned by doing so we were teaching them to spend every dime. The kids use wallets to hold their cash, and take them along when we go out. They have been saving more this way, and all 4 of the kids are now interested in opening up savings accounts.

They use their money as they see fit. I do not ask that they donate a certain amount, or save a certain amount. My oldest daughter decided she likes buying lunch at school, so she invested $10 in her lunch account so she can choose when she wants to buy.

We do not pay our kids based on chores. Chores are an expected part of life, and since mom and dad don’t get paid for chores neither do they. I will pay extra for chores that are outside the norm. A quarter for picking up a bucket of pinecones, $1/bag for the older kids to rack up leaves and put them in a bag, and $5/week for cleaning the cat litter (so far no one has taken me up on that one!).

We also have a family change jar. The family change jar helped us buy a puppy this year after 2 years of saving all our change. We’re currently saving for a DisneyWorld vacation. Everyone is motivated since we all benefit from the savings. We use a 5 gallon water jug that is empty, and taped on a picture of Disney to it. (note: we’ve since used it to go to Disney twice!)

As the kids get older I anticipate giving them their back-to-school budget to spend. Once they reach the age where they need $10 every other day we will set up a joint checking account so they can learn to manage small sums of money.

The kids will be touched by certain causes and feel motivated to donate money or their time. This is something I heartily encourage. There is no better feeling than knowing you helped someone who needed it. My kids often donate change to various causes, and I expect we will find causes that they personally feel drawn to support throughout their childhood.

What about you, how do you deal with allowances? Do you use an allowance as a springboard for talking to kids about money?

Kelly