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Bright ideas from our readers: teaching financial responsibility

GreatSchools' readers give advice on teaching kids about money.

By GreatSchools Staff

Thanks to the many readers who responded to our question about what to do about allowances and teaching children about financial responsibility. Here's a sampling of what our readers had to say:

Learning not to be an impulse buyer

A reader in California writes: "I try very hard to teach my 7-year-old son the value of money, the consequences of spending and saving. On impulse buying: Ever since he was a toddler, whenever we go to the store, I show him the grocery list and explain why we were there in the first place. If it is not on the list, we don't need it and therefore we are not buying it. "Another trick that really works is honing my son's appreciation for window shopping. On Friday afternoon we would have our window shopping event. I let him browse the toy section without interruption. And then I ask him what he wants the most and he can save for that, or if he gets lucky, buy it on payday if it is not too much."

Living on a budget

A reader in Pennsylvania writes: "Since my child is more cautious of prices when it is his money he is spending, we establish the items needed, store sales, etc. as you suggest. Then 'we' establish a budget, which I in turn give him in cash. I purchase necessities such as shoes, socks, underwear and a winter coat. He must purchase everything else with his cash. There are times I add a little money, such as if there is a nice shirt he likes & I would like him to have, we agree on an amount he will pay ($15.00 or so) and I pay the difference. This has worked for the past four to five years. My son will be 16 in May. He attends a public school that does not require uniforms."

Tying allowances to chores

A mom in Arizona writes: "In our family we do tie allowances to chores Monday through Friday. For example, my-9 year-old gets $1 per day ($5 per week) if chores are completed by the time Dad gets home. Of that $5, 50% goes to savings, 10% goes to tithing, 10% goes to the poor and 10% goes into her mission fund. However we also have Saturday morning chores where she has to wash windows, dust, help vacuum and wash the van in addition to her regular chores. These chores do not get a monetary reward. But if we all finish our chores early enough we get to go do something fun or just hang out doing whatever we want. We linked the Monday to Friday chores to allowance because it goes against my grain to just hand my kids money. I want to prepare them for working at 'real' jobs and doing their best in a timely manner. By the way, they always seem to have plenty of money and buy gifts for gift giving or for themselves. Sometimes we even borrow from them. My 5-year- old gets 50 cents per day or $2.50 Monday through Friday. He is currently saving for a $60 remote car he thinks he must have. It will take him several months but by the time he purchases it, I think he will have a great understanding of money. So far it is working out great and we have very responsible kids."

Cashing in

A reader in California writes: "When I was growing up, my mom would give us poker chips everytime we did our chores or volunteered helping. We would keep them in an empty coffee can. At the end of the week, we would cash our poker chips in for money. Then we would decide what we wanted to do with that money. It taught me that it's worth saving up to get what I wanted."

Sharing the cost

A mom in kentucky writes: "For my 14-year-old daughter whom we give an allowance, I tell her that I will pay half of whatever she wants to pay for clothes. She is very, very selective when she has to pay 'her' money and many times will decide she doesn't really want it afterall. "

Start them when they are young

A parent in Michigan writes: I have a 4-year-old who I want to be financially responsible. Therefore, whenever he helps do something, I give him a dollar. The dollar is usually used to go to McDonald's or to get ice cream. He does not have a set allowance, but he is positively reinforced for helping out around the house. The actual money equals about $25 per week. However, he is in charge of paying for anything for himself! We do charities too, and he puts $2 per week of his money into the church basket."

Comments from GreatSchools.org readers

08/4/2009:
"When my daughter was around 9 years old and we would go to the Mall, I would give them $10 to spend on whatever she wanted. Whatever amount of that $10 was left over,(for example, $6), I would double that ($6 becomes $12) and she could save it. Its amazing how careful she was then with 'her own' money!!"
01/29/2009:
" My problem with my kids was there money management. Every time the date for allowance come, i have to get to the same conversation about money management. I did a research and i found great tool, prepaid Visa card by Activacard.com. It gives me and kids what we all need. Teach your child how to pay with plastic,your teen learns how to track spending and budget funds available on the card. You can set alerts, every time your child spend money, you get text massage on your phone, so you know how much they spend, where they spend and when. In case of emergency you can fund the card right away by using your phone and you can turn card On or Of anytime. I think it's a great tool and i am happy to share this with other parents."
01/29/2009:
" My problem with my kids was there money management. Every time the date for allowance come, i have to get to the same conversation about money management. I did a research and i found great tool, prepaid Visa card by Activacard.com. It gives me and kids what we all need. Teach your child how to pay with plastic,your teen learns how to track spending and budget funds available on the card. You can set alerts, every time your child spend money, you get text massage on your phone, so you know how much they spend, where they spend and when. In case of emergency you can fund the card right away by using your phone and you can turn card On or Of anytime. I think it's a great tool and i am happy to share this with other parents."
01/29/2009:
"why is financial responsibility important for school and our stat and gvt and etc.?"
12/12/2008:
"My 11 year old son was not responding to your normal allowance. He was only doing chores for the allowance and was not taking being an integral productive member of the family seriously. Recently, I was laid off due to the production of my company being sent overseas, and my son was very inquisitive about what was happening. I explained everything in a very positive manner and decided he was old enough to 'get a job.' I set up a commission program and outlined the items he gets a commission for. He has a timecard that he has to complete and have signed each week to get paid. His commission has three parts. His job as a student, a productive integral famiily member and a responsible pet owner/manager. Each part has three responsibilities and if he does not complete each of the tasks daily Monday through Friday, he does not earn his commission. Since the funds are his and he is earning them I don't require him to spend/save it a certain way but I do guide him in the ri! ght direction. He is learning responsibility and respect for money and even offers to 'help' with household chores on the weekend"
10/9/2008:
"My dad gives the kids cash and tells them not to save it because of the time value of money. We've started investing it in the market for them and explained how mutual funds worked. My 9 year old is a compulsive spender and 'wastes' his money on Pokemon cards. Recently we've had to explain the value they've lost in the market. We've told them that even though it's a risk, we think they should invest their cash now because the market will most certainly go up. They are saving for cars, and we've told them that years from now we will match their funds if we are able."
03/5/2008:
"My teens are a lot more careful with their own money than with my money. For that reason, I require them to use their own money for many of their purchases. Sometimes I agree to pay for half and they pay the rest. They frequently forgo items when it requires them to spend their own cash. I require my teens to pay their own car insurance, therefore, they need to get a job by the time they get their driver's lisence. Because insurance rates are tied to grades, they know it will save them money if they stay on the honor roll. These requirements help motivate them to be responsible with school, work, driving, and spending. It's never a matter of whether or not we can afford something, it's a matter of them taking responsibility--if they want something bad enough, they can earn the money to pay for it. We frequently talk about the type of money that can be made in various careers. If they want a high-paying career, they must get the training that will help them reach thei! r goals. Usually that means taking challenging classes instead of only the minimal graduation requirements. Even though money should not be the primary factor in choosing a career, it should also not be ignored. Those who make a good living will have more optiions and choices in life. "
02/6/2006:
"My 7 year old son and I just started collecting items to be recycled. I thoroughly enjoy teaching him to earn money and distribute it. He saves a little and chooses what to buy with the rest. We also went to the recycling center to observe the procedure. It was really neat."
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