Kids’ Allowances
May 19th, 2006 | by Molly's Brother |Instead of just handing over money to your children every week or every other week, teach them how to live and work with their money. Hollis Page Harman, author of Money Sense for Kids! suggests that you end this sense of entitlement that is plaguing our kids (or–worse–our country). She mentions that parents should put their children on the 10/20/70 Plan.
10 Teach kids the value of saving money. Teach them how to “Pay Yourself First.” From the allowance, 10% should go directly into a savings account. Help them open their own account at your bank. This shouldn’t be a problem as bank’s usually have savings accounts aimed at children under 18. (They usually waive the fee that they would charge your for having less than the minimum amount in a savings account.) Help them fill out their passbook. You’ll teach them invaluable skills that they’ll need as they grow.
20 Teach your children how to budget. Allow them to put 20% of their money away for a short-term goal. Do they want a certain video game? Don’t buy it for them. Make them save for it in the short term.
70 And finally, the expenses that are current NOW. Sure, allow them to have 70% of their allowance available for spending now. At the end of the day, they are still kids.
Conversations about money should take place as they grow up so by the time they’re adolescents, they will have a deeper understanding and a better respect for money. (Unlike the Paris Hiltons and the Lindsey Lohans of the world.)
