Why Give Kids An Allowance

Most everyone agrees that giving our kids an allowance is a good idea.  A couple of tips from the eBook. 

• allowance is not payment for chores (kids should be helping out around the house as part of the family)
• make a list of items that the kids are responsible to pay for out of allowance (its not just for candy or toys of their choosing)
• allowance should be given on a regular basis, usually weekly
• if allowance is $5, give five $1 bills and encourage saving one of the $1's (more on setting up a savings account in the eBook)
• remember the goal behind an allowance is learning money management and the value of money

As kids get older, teach them to keep good records of how much money they have made, how much they have left, where the difference went.

Keep an eye out for teachable moments.

Teaching Kids The Value Of Money

It is becoming increasingly difficult to show our kids the value of money.  Money is more confusing than it used to be.  Kids see the exchange of plastic or numbers being typed onto a screen and it can be misleading.

Kids see paper and coins from time to time but not very often.  They are taught at school that 2 quarters and a dime is sixty cents or that 2 tens make a twenty but with so many transactions being conducted digitally, the relative value is lost.

Instead of an iPad costing $600 which would be a lot of cash, 30 twenties, all they see is 1 swipe of plastic into the machine and voila, they have an iPad!  This is very likely confusing and without any explanation, kids lose respect for how much things cost.

Parents need make sure kids understand what things cost and the easiest way is to put it in relative terms.  This iPad cost the same as 600 songs or games on iTunes, a new game every day for a year and a half, wow, you will be 9 years old by then!

Older kids can be taught real world lessons.  Let them pay for their cell phone out of an allowance or from money they have earned.  Let them fail occasionally at managing money too because it's better to learn a hard lesson as a teenager than as an adult!