Eight tips for parents to teach their children about money

(ARA) - A child’s first allowance is a milestone for both parents and children. The allowance experience, an American tradition, provides an inexpensive way for parents to give children lifelong lessons in money management and to help them appreciate the value of a dollar.

However, many parents experience a degree of anxiety about beginning an allowance for their children. Questions about when to start, how much and how often to give can overwhelm parents and make the experience stressful.

Award-winning authors Jack Jonathan and Sheelagh Manheim, PhD, offer eight simple steps for parents to make the most of the allowance experience, for their children and for themselves.

“Feelings of apprehension and hesitancy are natural and common for parents to experience when beginning the allowance process,” says Jonathan, author of the book, “Yes You Can… Raise Financially Aware Kids.” “However, it doesn’t need to be this way. Allowances are a powerful teaching tool and give children the opportunity to make money decisions regarding saving, budgeting, donations and spending.”

To jumpstart a positive allowance experience, parents can consider the following eight tips, taken from “Yes You Can… Raise Financially Aware Kids,” recipient of the “Learning” Magazine 2007 Teachers’ Choice Award for the Family.

Prepare to Give an Allowance

1. Determine your allowance philosophy — Each family handles allowances differently. Will you give an allowance unconditionally or with expectations of chores completed, school grades maintained or good behavior? Whichever allowance philosophy works for your family, communicate your expectations to your children and agree on the rules together.

2. Notice allowance readiness — How do you know when your children are ready for an allowance? Typically, by the time a child reaches the age of five or six, they are responsible enough to handle the task. To determine when your child is ready, consider questions such as:

* Do your children understand the value of coins and paper money?
* Have your children been asking for an allowance?
* Are your children ready to understand and practice the disciplines of saving and budgeting?

3. Decide how much and how often — Deciding on the amount of allowance can be a delicate matter. Some of the factors you may want to consider when setting the allowance amount and schedule include the age of your children, the purpose of the allowance, your own income, the expenses you want your child to be responsible for and your organizational skills.

4. Set the allowance rules — Before you begin the allowance, determine what you expect your children to learn about handling and managing money. Discuss issues such as saving, giving, completing chores and allowance advances beforehand to avoid conflict after the allowance begins.

Evaluate the Allowance Experience

1. Be there for your children — Be supportive as your children learn to manage their money. Help them develop a way of managing money that is responsible, and that works for them. Remember, an allowance is a learning experience.

2. Negotiate allowance increases — When the time comes that your child asks for an allowance increase, consider having them keep a daily journal of all their expenditures for one week. Then, go over the journal with them and decide if an increase is needed.

3. Handle issues and solve problems — Any time money is involved, emotions are sure to crawl in to the situation. When solving allowance issues, use the LAB approach: Listen, Ask questions and Be consistent.

4. Perform an allowance review — Because this is a learning experience, schedule a time to sit down with your child to review their allowance. Use this review to celebrate their victories and discuss ways to improve upon their financial challenges.

“Parents are the single biggest influence on a child’s financial future,” says Dr. Manheim, co-author of “Yes You Can… Raise Financially Aware Kids” and a child development expert. “By planning ahead and constantly evaluating the allowance experience, parents can take advantage of this extremely powerful educational tool.”

The book “Yes, You Can… Raise Financially Aware Kids” is available by calling (800) 234-3445 or online at www.stowers-innovations.com.

Courtesy of ARA Content

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