Age-by-Age Guide to Giving an Allowance
Must we introduce our little ones to the necessary evil of money early on? Most experts say yes. The question is: under what circumstances should parents give an allowance and how much is appropriate for young children?
“Mommy, there’s a new Barbie. Will you buy it for me?”
“Hey, Dad, a baseball card shop just opened up downtown. Can I have 5 dollars to buy something?”
To too many children, Mom and Dad are walking ATM’s, eager and willing to dole out cash at the push of a button. But in reality, parents should be financial advisors, teaching their children the value and responsibility of money before the “buy-me’s,” take over. What a child learns at home about the proper use of money is what he carries with him through life. Experts say one of the most effective teaching tools for wise money management is the allowance. At what age to begin and with how much money are important questions for families to consider.
Financial awareness starts at a fairly early age. Children as young as 3 already understand what money is. They may not be able to differentiate between a quarter and a nickel, but they know what the coins are used for.
When your child reaches the age of 4, you can give small change as a weekly allowance. For this age, money still does not hold any particular value. Ask your child to save it in a piggy bank rather than try to spend it right away, especially since there will be few things he can afford.
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