As a savvy mom, you know it’s never too early to start teaching your children about money. A great way to do this as your child reaches elementary school and beyond is by giving them an allowance. There are many ways to do this – just select the option that is best for you.
Chores = $
You can give allowance based on chores with specific money amounts. For example, you can decide to pay fifty cents for setting the dinner table, $1.00 for keeping their bedroom clean all week. You decide the chores you would like your child to do, and then show them how to do the work correctly. Let them know ahead of time how much they get for each job, and keep track. Decide how often they will receive the money they have earned.
Set the amount
Another option is to have a set amount of allowance based on their age. For example, your children may earn half their age in allowance. A five year old would earn $2.50 a week. In order to earn their allowance, they have to keep their room clean, do an assigned job each day, and help out with other things that you might need. When they don’t do jobs or keep their room clean, they lose part of their allowance for the week.
Give it away?
Some parents give their children money without requiring the child to earn it. This option robs the allowance of its value. When children have to earn it, it means more to them. However, if you don’t like the idea of putting your kids to work, you can still teach them about money. For example, you could assign a requirement to the money, such as good grades or good behavior.
Teach them to save
Regardless of how your child earns his or her allowance, another great way to teach financial responsibility is to help them learn how to save it. We do our banking at PNC, which has six Lansing-area locations. Like many other banks, PNC offers a “Minor Savings Account” that children can open with an adult, usually a parent or guardian. It only takes a $25 initial deposit to open the account and the account has no fees associated with it. Using a register, children are able to learn simple math – addition (and occasionally subtraction) to balance their account.
Whatever option you choose, staring an allowance with your children will teach them about working, how to spend money, and how to save it as well.
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