Do's & Don'ts – Of Giving Your Kids an Allowance

You can teach your kids important money management skills by giving them a regular allowance.

- By Tanni Haas, Ph. D.

But how do you ensure that they end up learning what you want them to learn? What are the most important do’s and don’ts when it comes to giving your kids an allowance?

COMMUNICATE CLEAR EXPECTATIONS FOR SPENDING, SAVING, AND GIVING

It’s important to communicate clear expectations for what your kids are supposed to do with their allowance. Experts agree that if you want to teach your kids about the value of money and also encourage them to become caring human beings then require them to divide the allowance into three parts: spending, saving, and giving. “This is an excellent way to expose them to the three most important things they can do with their money,” says Brad Munson, a personal finance expert, “and it’s a lesson that can last a lifetime.”

Come to a mutual agreement about how much money they are allowed to spend, how much they are supposed to save, and find a charity that they truly care about. As Susan Borowski, the author of “Money Crashers” puts it, having kids “choose the charity of their choice will make them more likely to set aside the money. Just like we give to charities that matter to us, children also need to give to a charity that matters to them, or they won’t be motivated to do it.”

USE THE ALLOWANCE TO INSPIRE REGULAR CONVERSATIONS ABOUT MONEY MANAGEMENT