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August 8, 2011
What An Allowance Can Teach Kids

Find out how an allowance can teach kids important lessons about money before the stakes get too high.

Transcript

Many parents struggle with allowances. I don't recommend tying allowances to completing chores. Handling an allowance should teach your kids how to manage their money before the stakes get too high. A few thoughts:

What can you afford? It's okay to speak candidly with your kids about the family's budget, expenses and savings goals. Your financial habits will likely influence your children's, so share your decision-making process at places like the grocery store and encourage sensible behavior. \n

Teach children the difference between needs and wants so they can distinguish between necessities like food and shelter, and luxuries like toys.

Bottom line: Handled right, allowances provide a great opportunity for kids to learn about money management and personal responsibility.

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