READING 2 Kids and Money

Many children have to do chores around the house.

KIDS and MONEY

Read the following article. Pay special attention to the words in bold. 14.3

Kids like to spend money. With part-time jobs, an allowance1 from their parents, gifts from grandparents and others, and no bills to pay, kids have the most disposable income2 of any part of American society. According to a 2019 statistic, teens between 15 and 17 have $4,900 a year to spend. While some teens think about saving their money, about 21 percent say they don’t save any money at all.

The average American child gets an allowance of about $800 a year. In 90 percent of American homes, kids are expected to do some chores3 in exchange for their allowance. In many cases, this is no more than one hour a week. What does an allowance teach a child about money? Many experts believe the answer is nothing!

Parents need to talk to kids about money early. When is the best time? The earlier the better, according to experts. Even preschool children can learn about money. For example, they can learn that you need money to buy things and that you earn money by working. They can learn that there is a difference between the things you want and the things you need. Between six and 10, children can learn to make choices and to compare prices. Between 11 and 13, they can learn that they should save 10 cents of every dollar they receive. Between 14 and 18, they should start to compare the cost of different colleges.

Warren Buffet is one of the most famous billionaires in the world. He says that the age at which parents teach their kids good financial habits will determine how successful the child will be later in life. Buffet taught his children the value of learning from experience. He allowed them to succeed and fail on their own. He did not help them financially if they got in any trouble. Interestingly, he is not planning on leaving his grown children a large inheritance4. He said, “I want to give my kids just enough so that they would feel that they could do anything, but not so much that they would feel like doing nothing.”

1 allowance: money children get from their parents for everyday expenses 2 disposable income: money a person can spend after expenses 3 chore: a household job, such as washing the dishes 4 inheritance: money a person receives from someone who died