How to Give Kids an Allowance
How to teach your kids the value of money.
Giving kids an allowance can be a great way to teach them the value of money. Perhaps that's one reason why so many parents do it. According to a study from T. Rowe Price, about 70 percent of all American kids get an allowance. That's up from just 47 percent in 2013. As with anything, there's a right and a wrong way to dole out allowances.
For starters, don't tie allowances to chores. You want your kid to know that being a part of the family means doing chores. You don't get paid for emptying the dishwasher, so why should they? Instead, allowance can be given for activities above and beyond chores. This way they'll learn that money is tied to work, not just doing the things they're supposed to do.
As mentioned earlier, allowance is a good way to spark up discussions about money. As your kid grows older, talk to them about budgeting the allowance. As Money reports, one good idea is to let a teen handle the money you were going to spend on back-to-school clothes and supplies. Help them with the process, but allow them to make mistakes. If they run out of money but still want new jeans, tough luck.
Remember that above all—giving an allowance is a chance to teach money habits that can last. Make sure you stress the importance of saving some of that money, so the idea of savings is set early in your kid's life.
Article written by Chris O'Shea for SavvyMoney.