Teaching Your Kids About Money
Consumer banking site bankrate.com yesterday delved into a topic that totally fascinates me: When to start giving an allowance and how much.
I'm obsessed with the topic because I never had really got an allowance. Nor did I have assigned chores. I'd always heard other kids talk about both things, but I could never really contribute to the conversation.
Don't get me wrong. I did housework. I learned my way around a kitchen making dinner for my family nearly every night when I was in high school. And my parents gave me money for lunch every day. But the two were never linked. And when I went to college, my folks just assumed I would handle my daily financial business on my own without bothering them and I did.
Financial experts, however, would probably argue that letting your kid start to manage money for the first time at age 17 without much prior experience is probably a recipe for disaster. In fact, the experts Bankrate spoke to said parents often wait too long to start doling out the dinero:
The first mistake most parents make is starting too late. The majority of parents wait until their children are tweens (9 to 12 years old) and they miss out on the opportunity to discuss money with young children who are more apt to listen to, and take, their parent's advice. By the time kids are teenagers, they have additional influences on their spending habits, including friends, advertisements, pop culture and the media.
According to Bankrate, as soon as your child begins to express a sincere interest in material wants, it's time for an allowance. We're talking ages 3 through 5.
The preschool set, of course, gets minimal amounts because, let's face it, they could just as easily drop it on the ground as spend it. But by kindergarten and first grade, most kids grasp the differences between spending, short-term savings, long-term savings and donating. By letting them sort their money into those four categories, they can learn responsible money management skills.
The money battles I dread are the middle and high school years when the label on the backside of a pair of jeans suddenly means more than life itself. (Of course, those jeans never seem to cost less than $100.) Bankrate recommends parents hand over a twice yearly chunk of change for clothes--and no more--and to let the kids spend it as they see fit--with a little tough love thrown in. So, if they neglect to buy a new winter coat, it's on them.
Finally, it turns out my parents might have been right not to pay me for specific chores. Aletha Solter, a developmental psychologist told Bankrate that by keeping allowance and chores separate, children are more likely "to learn the value of cooperation and experience what it feels like to contribute to the family."
Hmm. We'll have to hear some real-life examples to evaluate that last one. Let me have it. I want to know how you handle the mix of kids and money. Is it a tug-of-war? A delicate negotiation? Is there copious whining involved? And how do you let your kid run around in an old winter coat even if its his fault he doesn't have one? (You can tell already that I'm a doormat.)
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