Give Your Kids Flying Lessons

Teaching your kids the essentials of money management will help them grow their own wings.

The goal of parenting is to help children to grow wings to eventually fly away. Building financial confidence in your children's lives is one important way that you can prepare them for the flight. Anutr Yossundara/Shutterstock

Kids of elementary school age are becoming aware of the real world around them. They are eager to learn and still believe everything that adults tell them. And they want their own money.

For all of those reasons, I suggest that now is the perfect time to start a simple allowance system. This will create wonderful opportunities for you to pass on your values as you closely guide your young children through simple lessons on giving, needs versus wants, and delaying gratification.

How Much?

So, how much allowance should a young child receive? The amount depends on your financial situation. Some families set allowance according to age—say, $1 for each year of age. This eliminates questions about when and how much to increase.

How Often?

At this age, kids do better with close supervision and short time frames, so receiving their allowance weekly is best.

Should It Be Tied to Chores?

Many experts say that allowance should absolutely be the payment that children receive for doing their chores and assigned jobs. No work, no pay.

Others feel that citizens of the “family community” should share in its income and responsibilities. They say that an allowance should not be the payment for chores, but they add that with privilege comes responsibility. Citizens must do chores and jobs because they are part of the community. That’s what good citizens do.

4-Jar Management

A simple way to teach a child basic money management is to get four jars and label them: “giving,” “long-term savings,” “short-term savings,” and “spend now.” Clear plastic containers are best because your child will be able to see how the coins and currency are accumulating, but you won’t worry about the hazards that glass containers can present.

• “Giving” is money that your child gives to charity or church.
• “Long-term savings” are for college or something far in the future.
• “Short-term savings” are for something significant, such as a new bike or special toy.
• “Spend now” is money that your child can spend right away.

Using the four-container system, you may decide on a 10-30-30-30 plan, where 10 percent is designated for giving and 30 percent each for long-term, short-term, and immediate spending. Or you can do 10-30-40-20. Whatever it is, make it nonnegotiable, and then help your children to use their math skills while at the same time developing a habit of managing their money before they spend it.

Last, teach your children, “To whom much is given, much is required!” A simple spending journal is a way that children can become accountable for how and where they spend their money.

The goal of parenting is to help children to grow wings to eventually fly away. Building financial confidence in your children’s lives is one important way that you can prepare them for the flight.

You may believe that you have lots of time to deal with the letting-go part of parenting. That may be true, but I can tell you from experience that it will be a lot easier if you start now.

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