Freeman's Blog

money lessons for your kidsIn a recent survey of American households, 61% of parents said they pay their children an allowance that averages about $15 a week or $780 per year. The allowance often rises with age, but 54% of parents said they began payments when a child turned age eight. About 48% of parents give more to school-age children who earn good grades — with payments for an “A” averaging $16.60.

Only 1% of parents reported that their children save any allowance money, despite the fact that mom and dad tend to cover many of their discretionary expenses.

Here are a few tips for parents who might prefer to tie an allowance to important money lessons:.

  • Clarify (and stick to) your conditions. You can help your children comprehend that money is earned by explaining why you are giving them an allowance, what tasks you expect them to do in return, and what actions will cause them to lose it.
  • Encourage kids to think about the future. Introduce some guidelines for saving. Suggest that children set aside a certain percentage each week for long-term goals (like a college education) and for shorter-term wants and needs. As an incentive, you might offer to match their savings dollars.
  • Talk about family money issues. Use time at the dinner table, and/or lengthy car trips, to discuss budget challenges and plan large purchases. This could help prepare your children to practice sound money management throughout their lifetimes.

Source: American Institute of Certified Public Accountants, 2012

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