MINNEAPOLIS (WCCO) – The saying used to be “Money doesn’t grow on trees, kids.” Now, it’s more like, “Mom and Dad’s money just doesn’t pop out of the ATM.”
We all have our own ways of teaching kids how to be smart with money, so that had WCCO viewer Tammie Leibold asking, “Should we give our kids an allowance?”
Nicole Middendorf is a financial advisor with Prosperwell Financial. She’s also a mom.
“If you give your kids an allowance, you’re talking to them about money and you’re teaching them about money,” she said.
She recommends starting as early as preschool – when kids start to ask about money and understand the difference between a quarter and penny.
“If you start early with an allowance, you’re allowing them to learn how to save money and hopefully invest some of the money, but also donate some of the money to charity,” she said.
Some parents give a dollar for every year of age. Others give their kids the discretionary money they’d spend anyway and allow the kids to decide.
“You want to look at how much money you can afford,” said Middendorf. “A great exercise is to teach your kids the difference between a want and a need.”
A study by the American Institute of CPAs found 61 percent of parents give an allowance. The weekly average, for all ages, is just under $15 a week. Almost 90 percent of parents say kids must do their chores to get their money.
Middendorf’s advice to parents: if you’re going to give an allowance, be consistent. She suggests parents act like it’s a job, and don’t withhold an allowance as punishment. She also encourages setting up guidelines for kids, like spending a third on what they want, saving a third and giving the last third to charity.