Views on money are as different as the people who hold them, but there are several guidelines to consider when teaching children about finance, said Sharon Danes, a professor of family social science at the University of Minnesota.
Allowance systems: The “earned income” approach (allowance tied to chores) more closely reflects the real world, but it can lead to parent-child conflicts. The “entitlement” approach (allowance separate from behavior) may reinforce the idea of money as a shared family asset, but it does not mimic the relationship between work and pay, Danes said.
Dole system: Handing out money only when it is necessary or a child asks allows for great control over spending and flexibility if a parent has irregular income. But it may lead children to believe that there is an inexhaustible supply of cash, Danes said.
When to begin an allowance: Danes advises beginning an allowance when children can tell coins apart, are comfortable with counting numbers and have spending opportunities.
How much should an allowance be: This may be determined by the child’s maturity, the items it will cover and the amount that the parents can afford. In a 2010 Tribune poll, the mean weekly allowance that Chicago respondents thought a 10-year-old should get was $6.94. The mean in suburban Cook was $5.29.
Be consistent: Figure out what you want to teach your children about money and how best to do that, then stick to it.
