Kids’ allowances: How to teach your children to be smart with money

Kids’ allowances: How to teach your children to be smart with money

FOX19 - Whether or not children should get an allowance is a hot button topic for parents.

New data from an allowance tracker called "RoosterMoney" finds kids between the ages of 4 and 14 received, on average, $454 in allowance last year. That works out to about $8.74 a week.

An allowance can be a good first step in helping your kids learn how to manage money. But the mistake too many parents make is handing out cash without providing any guidance to go along with it, according to RoosterMoney. That's likely why very little of the money provided in allowance to kids is saved.

So what should parents be doing when they give that allowance?

Financial education isn't happening in many schools. That means parents are the ones who will teach children how to handle money responsibly.

That's a big job, so start early.

When kids are little, start with counting money. Make sure they know their coins, and how to add and make change.

Then, give them a sense of how much things cost. If your child gets $5 a week and the Lego set they really want costs $50, map out on a calendar what ten weeks looks like, so they know how long it will take to save that money up.

Encourage them to set those savings goals. When you go grocery shopping, let them see how much groceries cost.

When you take money out of the ATM, make sure they understand you're taking money you earned out of your own account, and that the ATM machine doesn't just dispense cash.

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