Ask any parent what it’s like to have kids and they’ll likely tell you it’s the most difficult, yet most rewarding, work they’ve ever done. It’s actually quite hard to teach a human literally everything. How to handle money the right way is included on that long, long list of things you need to teach. So what’s the best way to do that? An allowance.
Many financial experts agree that an allowance remains the most effective way to teach kids about money. As CNN Money notes, start the process out when they’re about six years old, even though studies say most kids only start understanding and valuing money when they’re about 12 years old. The earlier you start, the more money becomes normalized. Not sure how much to give? At first, try tying it to their age — when they’re six, they get six dollars a week. However, keep in mind that this is a sliding scale based on what you can afford and what you expect your kids to pay for. If an allowance is putting a strain on your budget, it’s time to make an adjustment. Talk with your kids about what the allowance should be used to cover and how much they should save and donate each time.
While part of an allowance can be automatic, it’s a good idea to make your kids earn a portion as well. A good guideline is making 10 to 20 percent automatic, while the rest is earned. Don’t shell out cash for basic tasks like cleaning rooms and emptying the dishwasher. Instead, kids should earn their allowance via more extensive tasks, like mowing the lawn or painting the porch. Doing this will help show them the value of hard work.