How to Teach Your Kids Money Management Skills
Do you give your kids an allowance? Providing an allowance for your kids can be a great way to teach them money management skills as well as save you money. By giving your kids a set amount of money, you no longer have to constantly pay for small things they want. That doesn’t mean you can’t do this on occasion when your budget allows, but most of the time their allowance can purchase their wants, helping you keep your family on a budget.
At Lincoln Savings Bank, we want you to achieve your financial goals and be able to save money for important future investments, or maybe just a dream vacation. Check out these allowance tactics below to teach your children money management skills and save your family money!
Only you can know what age your child is ready for an allowance. Ask them some basic money questions to see how well they understand the value of a dollar, like, “How many quarters are in a dollar?” or “If you have two dollars and something costs one dollar, how much will you have left when you buy it?” Most parents start their kids on an allowance at age 6 or 7.
One easy way to decide on an allowance amount for your kids is to give them $1 per year of age each week. If that doesn’t work for your budget, allow your kids 50 cents per year of age each week. You can choose whether or not you want the allowance to be simply about money management or in return for chores. Linking allowance to chores can help teach kids about being rewarded for a good work ethic, but some parents believe that chores should be taken care of whether there is a reward or not, so they choose not to associate the two.
Once your kids have an allowance in place, it’s up to them what they spend it on. They can purchase small toys and treats or save up their allowance for something bigger. As parents, you might consider not paying for these items for your kids once they have an allowance:
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Remember that your children learn their money habits from their role model – you. How careful you are with money, when you splurge and when you save, and how you react to bills and necessary expenses will show them how to view and use money.
If you think your children are ready for a savings account for their allowance or other income, set one up today with LSB!
Lincoln Savings Bank, Member FDIC