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by Victoria Pericon
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Teaching your children
good money management early on will help them gain financial
independence and may very well prevent them from experiencing
crippling credit card debt later in life. But they cannot develop
financial responsibility and healthy attitudes about spending and
saving without your guidance.
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Providing your children
with an allowance is an important step in teaching financial
responsibility. How much to give your child, at what age the
allowance should begin and the conditions placed on the amount given
are all factors to consider.  There is a debate regarding whether a
child&rsquo;s allowance should be tied to performing chores.  Some
parents believe that paying children to do chores is a mistake
because they should know that performing household tasks is part of
being a responsible member of the family.  Others take the position
that paying a child to do chores teaches the value of work.
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Dr. Charles Sophy, blog
author of &ldquo;Keep Them Off My Couch: Practical Answers for Life&rsquo;s
Biggest Problems,&rdquo; firmly believes that not only should an
allowance be tied to the completion of chores, it should also be
based upon adherence to house rules.   Sophy also suggests that
allowance should be discussed when the child is capable of
understanding the exchange of money as well as the expectations
around the payment. &ldquo;The older the child,&rdquo; says Sophy, &ldquo;the
more his allowance is tied to his utilizing the money to manage his
own hobbies.&rdquo;
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How much money you give
your child will depend on many things, particularly the child&rsquo;s age
and what you expect them to do with the money. Janet Bodnar, author
of &ldquo;Raising Money Smart Kids: What They Need to Know about Money
and How to Tell Them&rdquo; (Kaplan Business, August 2005) advises three
rules for setting up an effective allowance system: don&rsquo;t start too
young, keep it simple and tie the allowance to spending
responsibilities. &ldquo;Put young children in charge of the one thing
they most like to spend money on, whether its stickers, crayons or
mini racing cars,&rdquo; says Bodnar, &ldquo;You can expand the allowance as
they get older to cover snacks, after school entertainment and
clothing.&rdquo;
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If the child is
responsible for buying his own clothes, lunch and paying for his own
entertainment, you would have to give him a larger allowance than if
you intend to continue providing those necessities.
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It is a good idea to
teach your children the importance of saving money as early as
possible by making it clear that you expect them to put a certain
amount of their allowance towards savings.  Joni Kirk, mother of
three young children started giving her oldest child four dimes each
week when he was two years old.  One dime was for church, one went to
his &ldquo;savings&rdquo; piggy bank and two went into his &ldquo;spending money&rdquo;
bank. Now five, her son gets four quarters each week for allowance.
&ldquo;I think overall this has been beneficial to our son. He has
learned about savings and making judicial decisions&mdash;even at his
young age,&rdquo; says Kirk.
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<strong>
This article was written by Victoria Pericon.<br />
If you wish to use this article in any manner, you must <a href="index.php?option=com_content&amp;task=view&amp;id=51&amp;Itemid=165">request permission</a>.</strong> <br />
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