Your Children’s Allowance: Teaching Your Kids About Money

Here on the Straight Talk blog, we often talk about the importance of teaching your children about money. We know that doing so can be difficult; after all, many adults are still mastering the art of fiscal responsibility, which can make it difficult for them to pass lessons on to their kids. And even if you’re a savvy saver, you may not know where to start when it comes to teaching your children about your strategies.

Trent at The Simple Dollar recently shared how he teaches his young children about money. It’s a method you may want to try with your own child. He suggests dividing your children’s allowance into four categories:

1. Spending. Allow them to spend this money on anything they want – mp3s, video games or toys.

2. Saving. This part of their allowance should be put away for a bigger future purchase, like a gaming system or a tropical fish.

3. Investing. Put this portion of your child’s allowance into a long-term savings vehicle, like a CD, where it will earn interest.

4. Giving. Giving back is an important part of responsible money management. Help your children choose a charity to donate to from their allowance on a regular basis.

By covering all of these bases, you’re teaching your kids all about the most important angles of money management. You may find that putting the cash into separate containers helps you illustrate these concepts to your children. Plus, as we all know, there’s nothing better than watching your savings grow.

Do you manage what your children do with their allowance? What percentage of their money do they put into each category?

External Link Image Label Links to non-Ally websites

We provide links to third-party websites for your convenience. Although we provide a link, Ally Financial is not responsible, nor can we guarantee their products, services, or information. We suggest you review their online policy and security practices to learn about this third party and how they handle consumer information.

1 comment

  1. 1
    Bill at FamZoo

    For families on our site, here are the average allocations for each category as of right now:
    Spending: 64.7%
    Saving/Investing: 22.9%
    Giving: 11.7%

Leave a Comment