You got an allowance when you were a kid, right? Well, now it's your turn to pass the tradition on to your little ones. Only, you've also got to make sure your child can tell that money is different than their other shiny things. And that you really want them to understand its value.
One of the best ways to ensure your children grow up financially fit is to give them practice at managing money. Here are three suggestions on how you can help make sure your allowance plan is getting the right message across:
- Decide the amount. Figure out how much you'll pay your children and when (every week, biweekly, monthly). Then stick to it. And then let them know what they can buy with the allowance. You might decide to pay for needs such as school supplies or sports equipment, while they can use the allowance for fun stuff like toys or going to the movies.
- Use it as a teaching tool. Provide jars or envelopes that say “Save”, “Spend”, and “Give”. Show them how to divide their money so they can save some of it, give away some of it (to a local charity, for example), and spend what is left. You could teach your children the value of budgeting by not giving them more money once they have used up all their allowance.
- Introduce them to financial products: Deposit their allowance into a youth savings account and help them manage it wisely. CoastHills offers youth savings accounts and even a fee-free checking account specially designed for older teens who are ready to use a debit card. To encourage savings, tell your children for every $1 they set aside for long-term goals, you’ll match it in a youth savings account. Share the statements with them so they can see their money grow.