Parenting experts may argue that doing well in school would also be part of a parent’s normal expectations, but 48 percent of the parents surveyed admitted that they pay their kids for getting good grades, with an “A” bringing in an average of $16.60. But regardless of how a kid gets his cash, parents need to stress the need to save instead of spend.
“Parents need to make sure they’re also passing along financial sense with those dollars and cents,” Amin said in a statement. “Earning, budgeting and saving are all important lessons that can be tied to allowances – lessons that can help put children on solid financial footing.”
“Parents should have a conversation with their children about the importance of saving,” Levison, a CPA and a mother of two, suggests. “I would also basically set up the expectation that some of those things that children want are going to have to be purchased with the money kids have set aside.”
“Money has become a taboo subject among friends and family,” she continues. “They’ll talk about a lot of things that used to be private, but they don’t want to talk about money. I think there’s absolutely nothing wrong with saying to your children ‘we cannot afford this’ or ‘this is not how we are going to spend our money.’ I think you have to be willing to make those statements.
A 5-year-old won’t understand money issues in the same way that a 15-year-old can, but it’s still worth starting that conversation as early as possible, Levison says.
“Even small children like to get coins and put them in the video games and those claw games and things like that,” she points out. “As soon as your child knows what it means to need or want money, you should start having those conversations.”
Parents should encourage kids to save 20 percent of their allowance, Levison says, though she acknowledges that many people have a hard time meeting that goal.
“There are a lot of things that people need to be saving for,” she explains. “People have a lot of wants and needs that can be met in the 80 percent, and so you want to save that 20 percent.”
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