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Earning Money

Allowance

Every week, your parents hand you a sum of money for completing the list of tasks on the refrigerator (taking out the garbage, raking the leaves, or whatever your parents choose), and tell you this is your allowance. They want you to learn how to be smart with money, but right now, you only know of one thing to do: buy things!


Did you know there are at least 6 things you can do with the money you have stowed away under your bed? You can: count it, earn more of it, spend it, save it, watch it grow, and share it1.

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Counting Your Money: On a lazy Sunday afternoon with nothing to do, take your money out and play with it. Find an adult to help you practice how to count change back or break a twenty-dollar bill. Just be careful not to lose any!
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Earning More Money: You already get the same amount every week for doing the same amount of work. Ask your parents if there is a way you could get some bonus cash here and there for picking up a few extra tasks. Remember: if you don’t follow through, they have the right to say ‘no.’
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Watching Your Money Grow: If you have enough dough to put into a savings account, you can gain interest. At Abbey Credit Union, you only need $5! Your parents can bring you in to learn more.


Spending, Saving, Sharing
The best way to keep your allowance money organized it to use the “Four-Jar Budget System.” Get four clear jars (or any money-holding container of your choice) and label them accordingly. Your parents will help you decide how much to put in each jar every week.2

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Giving: Any organization that you find yourself passionate about would love to receive a gift from you. This could be anything from your church, 4H club, favorite museum, or charity. Your donation could help organize an event or raise money for research. The possibilities are endless and knowing you’re making a difference is quite rewarding.
Boy holding coins for piggy bank
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Spending: The money in this jar can be used any way you see fit: add to your wardrobe, hang out at the arcade, buy some books or toys. This is your “free money” to do with as you please.
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Short-Term Saving: There is always going to be something you want that may require a few weeks of saving. This is when the “Short-Term Saving” jar comes in to play. You’ll have a set price for the item(s) you want, and by saving a certain amount each week, you’ll reach your goal! This jar is also helpful during holidays when you’ll want to buy presents for your loved ones.
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Long-Term Saving: This is money that you will one day put into an account (and maybe even invest for more growth) to save for use in the future. Your parents and friendly financial institute staff members can help you learn more about how to be smart with your long-term savings money. Ultimately, this will be great cash for college, traveling, or whatever your post-high school goals may be.

Parents: We Know You Have Questions
When do I start giving my kids an allowance? How much do I give them? There is no right or wrong answer to these questions, but many experts suggest beginning an allowance as soon as your child realizes that things are bought with money, around 3 years of age.2 As for the amount, that’s up to you. Make sure whatever you decide to give them is reasonable to your budget and age appropriate. Maybe you’ll want to give him $1 for every year he is old,2 adding more responsibility each year.1 For example, if Max is 6-years-old, give him $6 a week with a weekly task of taking out the garbage. When Max turns seven, give him $7 a week, but add straightening up the laundry room to the list.

There is no better way to teach your children about money than to let them experiment early. Kristan Leatherman of the Love and Logic Institute puts it simply, “(Our children’s) lives would be much happier and more successful if they learned financial self-reliance from someone who truly had their best interests in mind.”3 There are a lot of tricksters out there who prey on teenagers for their money. With an allowance, you can start early to help your child develop good spending and saving habits.

Here are some excellent resources for guidance on how to use allowance as a learning tool:

The Kids Allowance Book by Amy Nathan

Millionaire Babies or Bankrupt Brats? Love and Logic Solutions to Teaching Kids about Money by Kristan Leatherman and Jim Fay

Piggy Bank to Credit Card by Linda Barbanel

Raising Financially Fit Kids by Joline Godfrey

Money Doesn’t Grow on Trees: A Parent’s Guide to Raising Financially Responsible Children by Neale Godfrey and Carolina Edwards

Written by Leslie Rogers


1 Godfrey, Joline. “Chapter 3: Stage One: Ages 5- 8: I’m Just a Kid.” Raising Financially Fit Kids. Berkeley: Ten Speed Press, 2003. 47-68.
2 Godfrey, Neale, and Carolina Edwards. “When to Start Your Child on an Allowance.” MoneyDoesn’t Grow on Trees: A Parent’s Guide to Raising Financially               Responsible Children. Rev. Tad Richards. New York: Fireside, 2006. 23-39.
3

Kristan Leatherman “Allowance: To Give or Not.” North State Parent Magazine. Cont. by North Valley Bank. 2009. Web. 20 Oct. 2009.

 
 
 

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