Teaching Money Skills with an Allowance

Your children are back in school and it is time to become more consistent with your schedules and responsiblities. This will be an adjustment for your whole family and it leaves little time for relaxing together unless everyone is helping. When everyone in the family works together to complete daily tasks it teaches your family unity and responsiblity in helping one another.

You may want to start paying an allowance to your children. An allowance is one of the best ways to teach children how to manage their money. It helps them to distinguish their needs and wants and gives parents the opportunity to teach their children how to save for their wants. Some parents like to pay their children for good grades. The author of "Raising Money Smart Kids", by Janet Bodar states that buying grades is distracting to children from the real reward of earning grades, and the accomplishment they should feel when they have earned their grades.

An allowance is still one of the best ways to teach money managing skills. Create a work schedule with your children and discuss their responsibilities. Give them an annual review on job performance and allowance increase as their responsiblities increase. If your children do extra chores for your discuss incentive pay for those chores and how much money that would be for them. You could also match their savings to incourage them to save more than they spend.

Some parents feel uncomfortable in sharing the cost of items with their children. This is a very important life lesson they must learn so that they are able to manage their money as an adult. When eating out at a restuarant share the cost with them and discuss how much the tip should be for that service. As you fill up your car with gas share with your children how much it costs to drive a car per month and how you must budget every expense.

Your children are always learning from your example and guidance. Teaching them about money is another way to prepare your children for that step into adulthood.

See you next week.

Gina