FoxEd Newsletter July - September 2022 Raising Money Smart Kids It’s hard to learn the true value of money without actually having some money to save and spend. That’s why setting aside a specific amount each week as an allowance for your children can be a good way to show them, among other things, that cash is a limited resource. Here’s how to make an allowance system work for your family: • Start When School Starts Typically, kindergarten or first grade is the right time to begin an allowance. By this time, your child will likely have opportunities at school in the form of book sales, candy carts, and other treat days where they will want money to spend. Little ones will also have plenty of exposure, through you and their grandparents, of other places to shop both in person and online.
• Get it in Writing and Prepare for Negotiation Make a list, figure out how much those items cost and then share that information with your kids. The list of what your children are expected to pay for should be fairly simple in grade school and get more detailed as kids get older. Over time, add to the list of what they need to pay for: concert tickets, gifts for friends and family, gas money for the car. As years go by, there will likely come a time when your child asks for a larger allowance. Before making a decision, ask your child to give you several reasons they need or want more money. By doing this, you are teaching your children real life skills that will help them later when they ask for a raise at work.
• Settle on the Right Amount If you are unsure of a fair amount to start with, crowd source it through your social networks. Ask your friends and neighbors to see how much they’re giving. Perhaps the best way to decide how much money to give your child each week is to determine what you expect that money to cover. Will they pay for their own school lunches and snacks? Gifts for friends? In general, this amount will increase as they age. • Help Them Earn More What happens when your child wants budget-busting clothes or a Nintendo Switch on a $15 a week allowance? This is where the lesson of delayed gratification comes in. You can start a mom and pop 401(k) at home and match each dollar saved with another of your own. That will help your child reach the goal faster and be more likely to see it through. You can also offer your kids extra cash for extra work. If you go the extra job route, pace the cash flow and don’t make the payoff too fast. After all, you want to raise a saver who appreciates what they have.
Financial education tips are provided by SavvyMoney. Services offered through SavvyMoney are separate and distinct from any business conducted with Fox Communities Credit Union and are not guaranteed by or obligations of the Credit Union. For more information visit foxcu.org/savvymoney.
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