Today we'll cover Part 6 of a piece from Money titled "How to Make Sure Your Kids Will Live Better than You", an article that offers several ways to make this wish a reality. Today we'll cover Money's advice on getting the biggest bang for your allowance buck:
- Start early. As soon as kids understand that money can buy cool stuff, they're ready.
- Set ground rules. Spell out how much you'll give and what expenses they should pay. Increase both as they get older.
- Don't attach strings. An allowance shouldn't depend on doing chores or getting A's -- stuff kids should try to do anyway.
- Don't rescue them. Don't stop a foolish purchase or grant an advance if they run out of cash before payday. Kids learn best from their own mistakes.
I don't agree with some of this. #1 and #2 are ok, but as for #3, we break things into two groups. The first group consists of chores the kids do simply because they are part of the family. They get no allowance for these. The second group consists of "extra" tasks they can do to earn their allowances.
I agree with #4 after a certain age, but when your kids are too young (too young to even learn from their mistakes), you need to set some rules on what they can and can't buy.
Personally, Re: #4, I don't have kids yet, but when the time comes, I definitely plan to give my kids an advance before pay-day, but charge commensurate outlandish interest. Hopefully this will teach them the value of saving and paying with money you have, instead of borrowing to pay with money (and interest) that you don't.
Posted by: dforester | October 14, 2005 at 01:43 PM