Allowance helps kids develop sound money management skills

Children who receive a weekly allowance also have the opportunity to learn about money management skills that will be beneficial throughout their lives, said Sissy Osteen, Oklahoma State University Cooperative Extension Service resource management specialist.

“It’s important for children to learn about saving, spending and managing money,” Osteen said. “A good age to start giving an allowance is about 6 years old. This is a time when children are being taught about money in school. Parents can expand on those lessons at home by using the allowance as another teaching tool.”

 Osteen suggests helping a child learn the difference between “wants” and “needs.” She said $5 to $10 per week is an average to start out with, but let the child help determine the amount.

“Children have a variety of expenses, and together you should talk with your child to determine what expenses you as the parent are responsible for and what expenses the child is responsible for,” she said.

 These expenses can include things such as birthday gifts for friends and family, extra curricular activities, school bake sales, going to the movies or the latest video game.

Osteen said there is some controversy over whether to have children work for an allowance.

“Generally, children shouldn’t be paid for routine chores around the house such as keeping their room neat, helping clear the dishes from the table after dinner or taking out the trash,” she said. “If parents want to pay for chores, it should be for things that aren’t ‘routine,’ such as raking the leaves, washing windows or cleaning out the family vehicle.”

One thing parents need to keep in mind is that children deal with the same issues concerning money as adults do. Setting priorities and savings are just as important for children as they are for adults. Children should be encouraged to save a portion of their allowance for a long-term goal. Just make sure they save for their “needs” before their “wants.”

“Parents also can teach children valuable lessons by not bailing them out when the child falls short of a savings goal,” Osteen said. “If a child is saving for a new video game or a bike, and he or she falls short of the goal, parents shouldn’t make up the difference. Children tend to take better care of things they save for and purchase themselves rather than what is given to them.”

In addition, part of money management lessons should include giving to worthy causes or tithing to the family church.

“Learning sound money management practices isn’t something a child will master in a short amount of time,” she said. “It’s a process that they will build upon as more opportunities are given. The more attention parents spend on complimenting and encouraging good practices, the better prepared children will be to mange money on their own. The bottom line is parents should take the time to talk about money with their children. They will be doing them a big favor.”

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Trisha Gedon
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