If you give your children allowances when they begin school, leave the way open for adjustment. Keep in mind that your children's financial problems are just as real to them as yours are to you. If your children are always in need of money, either their allowance isn't big enough or they are not spending according to plan. Checking where the money is going may help uncover the difficulty. You may wish to have your children keep a day-by--day record of spending if they are having problems.
On special occasions, school entertainment for instance, you can supplement your children's allowance. If there is any fixed need, such as buying lunch at school, you will have to allow more. As each child grows older, you may want to increase his or her share of the family money. The amount of the allowance should be based on the things it is to cover and on the youngster's ability to manage money.
Parents should keep in mind that inflation affects children too. It is likely that your children's allowances will increase each year, in part if prices increase, but also because the allowance is expected to cover more expenses. Your second child may need a larger allowance at age 10 than the first one received at that age. This should be discussed with all your children so they will understand the fairness in the amounts of each allowance.
When your children are ready for school, you may feel that you can now give them an opportunity to earn--you can pay them for making good grades. This is a mistake, however, since one of a child's responsibilities is to do as well in school as he or she can without expecting a monetary reward. Moreover, when there are other children in the family and all are not equally capable, paying for grades may create a problem in family relationships as well as in emotional adjustment for the children.
Paying for good grades makes them an end in themselves. Parents usually want well-rounded children who have broad interests and not just impressive report cards. When children are paid for bringing home good grades, they frequently resort to bartering and in some cases to unfair means of getting their rewards. Parents should offer encouragement, interest, and praise, not money, for good grades.
What are a grade-school youngster's opportunities for earning? They will differ with the family situation, the child's age, health, and abilities, and the community.
If you live on a farm, your children have a unique opportunity--they can share in the farm enterprise. They may progress from the simplest of jobs to a junior partnership in the business. Such a progression has the advantage of demanding increasing responsibility and providing increasing returns. If your children are part of the farm business, they will learn something of the problems that arise when economic conditions change.
In town your children may earn their money from a paper route, from doing errands, and from other after-school jobs. Some enterprising children earn money by walking dogs, pulling weeds, and washing cars for neighbors.
By the time your children are of elementary school age, they should be accustomed to making choices as they spend. Now they may need your help in working out a system for dividing their money according to their needs. One mother and father and their nine-year-old son planned the following weekly schedule: $5.00 for school lunches; $1.50 for school supplies, personal needs, and treating his friends; 50 cents for religious and other charitable contributions; and 75 cents for saving. This youngster is well aware of his financial situation and can carefully weigh his expenditures.
As your children get older, their allowances should be increased to cover more purchases so they will have more experiences in choice-making. True, you can buy a blouse for your daughter in half the time it takes when you go with her and let her make the selection. But look ahead. Your daughter will have her own paycheck someday. She will be likely to spend it more wisely if she has had practice in making choices.
Your children will soon discover there are other ways of buying than with cash. Even if yours is a pay-as-you-go family, your children may want to explore the world of credit. If one of your children asks you to approve a credit plan for buying a new bike to use on a paper route, or a calf for a 4-H project, your responsibility is to keep the plan reasonable and practical. Be sure your child understands just how and when the money must be returned and some of the sacrifices he or she will have to make.
Your first opportunity to teach your child about saving may come when he or she wants some toy like all the other children have. When your child expresses an interest in a toy, help your child plan how much to save each week and how long he or she will need to save to buy the toy. if you are willing to help pay for it, tell your child so at the beginning rather than coming to the rescue at the last moment.
There will be times when your child's allowance is all spent and an attractive invitation to go camping or to attend a school event may make your grade-school youngster wish for a contingency fund. This would be a good time to suggest that he or she start a savings account from next week's allowance. Check with the banks, credit unions, and savings and loan associations in your area to see if they accept small savings accounts. Select one that does not charge fees for small accounts. Then, take your child to the bank, credit union, or savings and loan association to set up a savings account. Be sure to have someone at the institution explain how the account operates and answer any questions your child may have.
If there are no institutions in your area that accept small savings accounts, work out a system where you become a banker for your child. Be sure to pay interest on the account and open a savings account at an institution when the child can meet the minimum deposit amount.
Remember your children's birthdays and encourage them to remember those of their family and friends. Let them buy gifts for special occasions and friends' birthdays. Sometimes your children may pick out presents that cost more money than they have. When this happens, point out to them that a present doesn't have to cost a lot to be appreciated and that presents don't always have to be bought with money. Discuss how they can share their time and talents by making gifts or by doing special things for other people. Teach them that parents may really appreciate a week's worth of special chores more than a bottle of perfume or a box of candy. Contributions to religious organizations, 4-H and Scout projects, and Care packages take them beyond the circle of those they know into a broader concern for the welfare of others.
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