Kiddie Ka-Ching

Teaching Kids Fiscal Responsibility

Q: Dear April Masini,

I have three kids, 10, 7 and 5. The 10-year-old just asked for an allowance. My initial inclination was to turn him down, since he is provided with everything he needs, but then I thought that it might be a good way to get him to start managing his own money, instead of his mom and I just giving him the amount he needs for activities. It would probably be good for him to learn the value of a dollar, though I don't want him to feel hung up on money. What should I do?

Sincerely,

Dollar Dad 

A:

Dear Dollar Dad, 

Allowance is an important step in a child's development to individuate from parents. Parents can help the child become independent, learn the value of money, and gain self esteem by giving a child a regular allowance. 

* Becoming independent. When a parent gives a child allowance, the child has money of their own. They can spend it on what they want. They can save it if they don't have enough to buy something they want. They can donate it to charity. They can buy something for someone else. They can have a private part of their life separate  from their parents when they have their own money and their own financial life. 

* Children lose money and can be sad that they don't have it. They can learn it's value by having it or not having it. They can see that money is a valuable tool that can help them do things that they want to do.  

* When children use money successfully, they feel good about themselves and this builds their self esteem in a way that parents buying them the same thing, does not. 

Parents should follow the following tips for allowances

* Give the same amount every week. 

* Don't link allowance to chores or behavior. Some parents do choose to punish children by docking their allowance if they misbehave. I  prefer that parents give kids a graduated time out -- or depending on the child's age, grounding the child, and not linking money to the behavior. 

* Raise the allowance each year -- whether it's a quarter, a dollar or more. 

Kids still want what they see around them. If they see a great toy at a friend's house, they want it. It's really up to parents to teach children about coveting things, good values and planning how to spend money to stay within a family budget or  a kid's allowance budget.

And they've failed.

Parents want so much more than they used to--that they fall into debt, they cede control and raising of their children to schools, nannies and other entities, they push their children past childhood limits--over-scheduling and over-sexualizing their kids--and they don't understand why kids boomerang back into their parents' homes or become Gen X, Y and Z.

One of the most interesting dilemmas parents face is paying kids for getting good grades. It is an interesting choice of ways to teach kids about money that has pros and cons. 

Paying kids for getting good grades is an interesting choice that has pros and cons. 

* Replace character with money. One of the things that paying kids for getting good grades does is to replace character and value with a payment plan. Instead of teaching children to do the right thing, or to get good grades because it's a way to have a better life, or to try and achieve good grades because it's what parents and teachers are asking students to do, parents replace good values with good money. 

*Making money is a good thing when it's made honestly. It's also an important tool in life. Paying for grades is not a bad lesson -- but when it's taught in elementary school, the child is not offered the lesson to do the right thing for the sake of doing the right thing. That said, life is full of behavior and consequences. When a baby smiles at us, we reward that baby with affection and attention. A baby who does not smile as much is not as rewarded. A child who achieves -- by taking a first step, speaking a first word, or doing any number of things parents wait for their children to do -- is rewarded with non-monetary gifts like affection and presents. 

* Don't make money the only motivation. If you do choose to reward your child with money for grades, soccer goals or not dating until a certain age, make sure that money is not the only motivator you use. Make it clear that being part of a family requires everyone to pitch in whether they're paid or not. 

April Masini -- nicknamed "the new millennium's Dear Abby" by the media, is author of the best-selling books Date Out Of Your League and Think & Date Like A Man, the two (just released) step-by-step dating and relationship manuals, Ideas for a Fun Date and Romantic Date Ideas, and the critically acclaimed dating and relationship online magazine www.AskApril.com.

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