BMI Federal Credit Union
How to Help Your Children be Financially Responsible
This month is National Credit Union Youth Month, and to celebrate, we’re going to be presenting a series of tips that will help your children be responsible and knowledgeable in this financially-focused world.
This first series will focus on allowances. Parents seem to always have questions when it comes to starting their children on an allowance. When should I start giving an allowance? How much should I give my children? What should they have to do in order to earn their allowance? Today we’re going to take the top questions every parent seems to have, and break them down into easy-to-follow tips:
- Should I give my child an allowance? If possible, it’s best to give an allowance to your children. It teaches them to be financially responsible and helps them grasp the value of money from a young age. Children will think more about a purchase if they’re using their own money, helping them learn the difference between smart and impulse purchases. Plus, children will tend to value their things more if they used their own money to purchase them.
- When should I start giving an allowance? There is no set age or time when you should start giving an allowance. You can make that decision when your children show interest or seem like they’re beginning to grasp the concept of money. Most parents start giving their children allowances around the ages of six to eight years old.
- How much money should I give? One approach is to give your child one dollar for each year of their age, but there is no strict guideline. There are a couple factors that can help you determine the appropriate amount to start with. How much do they contribute to the household? Do they routinely assist with chores, babysit younger siblings, etc.? The other factor is based on what they plan on spending their money on. Sit down together and make a list of everything they are expected to buy themselves, such as clothes, music, movie tickets, etc. Make sure the amount can fit comfortably in the family budget.
- How often should I give an allowance? Some parents pay their children when they get paid, which may be every other week or once per month. However, once per week is the most common and allows children to practice budgeting on a smaller scale.
- Should an allowance always be tied to chores? If you expect everyone in the family to contribute to the household chores, then do not tie chores to allowance. You don’t want your child to except payment for every dish washed, carpet vacuumed or bed made.
It’s never too early to start teaching your children the value of money, and an allowance is an important first step in their financial education. Using these tips, you can build an allowance plan that will fit into your lifestyle and budget. Another great way to set your child up for financial success is to open up a Youth Checking or Savings Account for them. While an allowance is great for teaching your child the value of money, a Youth Account can teach them another important skill – how to be a consistent saver. Keep a lookout for other posts throughout National Credit Union Youth Month, where we will share information about how to get your children started down the road to financial wellness!