Page 76 - Book2E

Small opportunities are often the beginning of great enterprises.
—Demosthenes
68
represents a great opportunity for kids to learn about managing money through hands-on experience. An allowance is real money that kids can handle and manage now.
Giving children an allowance should begin when they can identify coins and cash, know how to count, and have spending opportunities. This often occurs around age five or six. If you decide to give your
kids an allowance, remember it’s important to pay it at regular intervals and to provide some general guidelines on how to spend and save it. Give them enough freedom to make their own decisions and mistakes.
Also, to help your children start learning how to save money, give them their allowance in denominations that make it easy to do so.
For example, if the amount of the allowance is $5, give them five one- dollar bills and encourage that at least one dollar be set aside in savings. Saving $5 a week at 6% interest compounded quarterly will total about $266 after a year, $1,503 after five years, and $3,527 after ten years.
Give them the freedom to spend their money
If your kids receive an allowance or earn money through chores, a paper route, or helping with odd jobs around the house or yard, encourage them to bring some of their own money with them when you go grocery shopping. Then they can decide if they want that soda, Popsicle, bubble gum, or candy bar enough to spend their money on it. If your children don’t have a source of income, allow them to manage money by letting them pay the grocer or the parking attendant.
Teach responsibility through activities
The following tips and activities provide useful insight for parents as they work to raise children who practice sound money management:
Take your child to the store . Let your child actually see a toy he or she Teaching Children About Money