2022

Money and Finance For Kids (Book Review)

Money and Finance for Kids by Thelma Ribeiro is a little different from other books I’ve reviewed. As best I can tell, it is self-published. It doesn’t have the typical copyright page with publishing details. There are no fancy quotes from famous people on the back. It’s just a book and story, which is very refreshing in its simplicity.

I discovered Money and Finance for Kids at a personal finance conference. The author, Thelma Ribeiro, was there selling the book. I’m always going to support authors of children’s books about money. A few dollars later, I had the copy in my hand that I’m reviewing now.

Money and Finance has another trick that sets it apart from other kid financial literacy books – it’s translated into Portuguese. Thelma Ribeiro is Brazilian, so you know it’s an authentic translation. I was tempted to pick up a Portuguese copy. That temptation didn’t last long. No one wants to read my book review when I don’t speak or read the language. I have some Brazilian friends, but their child is ten years old, which is a little too old for this book.

That’s enough of the back story, right?

Money and Finance for Kids Summary

The story revolves around 7-year-old Marlon spending one day with his grandfather. Marlon starts the day with his grandfather at the grocery store, where he spots a toy car he’d love to have.

This kicks off Marlon’s discovery of how money works. He learns that the barter system used to work, but it had some problems. It’s useless nowadays. He also learns that you can’t just copy money to make more. There’s real value behind money.

Marlon decides he will have to earn money by doing chores or starting a lemonade stand. He decides to go with the lemonade stand. The book walks the reader through his plan – what his costs and earnings will be. It’s not too far different from the classic video game Lemonade Stand. (For more lemonade entrepreneurship see The Lemonade War book.

Marlon doesn’t just sell lemonade. He adds value by telling a joke along with the lemonade. One could say that he’s selling smiles. It works, and Marlon makes almost enough money to buy the car. He’s close enough to finish it up by doing some chores around the house for extra money from grandpa.

It ends with a teaser of a sequel. What if there was a magical way that money could make more money?

The Bad from Money and Finance for Kids

There’s not too much to dislike about this book. I don’t like to point out negatives, but I feel that criticism, when due is helpful. I don’t know about other readers, but I get suspicious when all reviews are glowing. My eight-year-old loves to pick apart stories. I think he feels it’s a treasure hunt. He may have inherited that trait from me.

In this case, my son would have some questions about page 30, a few “Extra Questions to Readers.” This is a kid’s activity section. There is an image of chores and amounts that Marlon can earn if he performs them. The first question is, “Which two chores can he do to earn two dollars?” There’s no correct answer. There are three chores he could do, two for fifty cents and one for a dollar. However, no two chores add up to exactly two dollars.

Also, in nit-picky fashion two of those chores are worth “$0.5” instead of “$0.50.” For younger kids, seeing the 50 may be important, especially as they work with coins.

What Kids Will Learn from Money and Finance for Kids

Kids learn a lot about the history of money from bartering, to the invention of coins, and finally paper money. (No, Bitcoin isn’t in this book. For that, turn to the Teen Titans Go! episode about bees.)

Maybe every kid gets to a point where they say, “I want [X].” From time to time, parents can decide if they want to pay for it, but eventually, the item gets too expensive, and it’s time for kids to help.

Kids will also learn some basic budgeting, such as how to save for short, medium, and long-term goals.

Final Thoughts on Money and Finance for Kids

This book covers a lot of money basics that are perfect for a seven-year-old.

It’s extremely well-rated on Amazon. I don’t know if I’ve ever seen all five stars and one 4 star review. Click her to buy it now.

Consider this one more ⭐⭐⭐⭐⭐ review.

Brian MacFarland has reached more than 10 million people on his personal finance journey to financial independence.  He’s been featured in the Washington Post, U.S. News and World Report, and Lifehacker.

Read more on the About page.

If you enjoyed this article please Support Kid Wealth

The Allowance Game (Board Game Review)

Allowance Game

Phew! The kids are back in school after a long Thanksgiving break. Before they returned, we had a lot of fun at home playing board games. One of the games we played for the first time was The Allowance Game by Lakeshore Learning. I bought this game a few years ago, but we never got a chance to open it and play it.

Before I get to the game, I’d like to introduce you to Lakeshore Learning. There aren’t too many physical Lakeshore Learning stores around, but if you have one near you, you are in for a treat! Many Lakeshore Learning products are made for teachers to use in the classroom. However, there’s so much for parents to bring home and educate their kids. If you are homeschooling, I bet it has nearly everything you’d ever need.

Lakeshore has two products that caught my attention. One is the Lakeshore Multiplication Machine and the other is, of course, the Lakeshore Allowance Game. I didn’t know much about The Allowance Game, but sign me up for any game that teaches kids about money. (The Multiplication Machine is outstanding. I’m a strong believer that solid math skills are a great complement to a kid’s financial literacy education.)

Enough about Lakeshore learning itself. Let’s move on to the review of the Allowance Game:

What is The Allowance Game

The Allowance Game is a Monopoly-style game board where players go around the board, landing on squares to make money. The first player to $20 is the winner. Unlike Monopoly, there is almost no strategy to the game. You land on an “earn” square or a “spend” square. For example, you could earn 50 cents for walking the neighbor’s dog, but you could spend $2.25 buying school supplies. Typically you earn for doing chores or getting good grades.

Some squares, like “forgetting your homework,” can cause you to lose a turn. That means fewer times passing “Home” and collecting $2.

There are a lot more earn or receive squares than spend squares. Otherwise, it would be hard for someone to get the $20 necessary to win. Our game centered around one of my sons getting lucky enough to land on the “birthday” square twice. That’s $5 each time. My other son and I missed it, and we couldn’t compete.

Two squares require a little strategy. There’s a bank square and a lemonade stand square. On the bank square, a player can choose to deposit $2 and earn 50 cents every time they land on the square in the future. The $2 deposit counts towards the $20 you need to win the game. I landed on the bank square early and never landed on it again to get my 50 cents. The son who won the game had the same experience.

The lemonade stand square acts more like Monopoly property. You spend $1, and you own it. Then you collect 40 cents when other players land on it. (They are buying lemonade from you.) My son, who lost, bought the lemonade stand, and no one landed on it again. That’s how business goes sometimes.

There’s one thing that’s a little different from most games. The instructions are printed on the bottom of the box. If you pick up a second-hand version, you may think the previous owner lost the instructions.

What Kids Learn from The Allowance Game

The strength in this game shines when each kid acts as their own banker. (Allowance is designed for everyone to be a banker with the money in the middle of the board.) As the banker, the kids do a lot of math, counting, and making change as they go around the board. They are working with coins (nickels, dimes, and quarters – no pennies) and making change with single dollar bills and five dollar bills.

I regret not playing it years ago when my kids were 5, 6, or 7. They still enjoyed the game at (almost) 9 and 10, but they may have been happy to play ANY game.

What’s Bad About The Allowance Game

There are not too many negatives about the game. The biggest one, I would say, is equating spending with negative consequences. You lose a dollar giving to charity. You lose $1.20 at a garage sale. Charity shouldn’t be a negative, and garage sales are generally frugal. Fortunately, there aren’t many of these squares.

A few spend squares are buying bubble gum, playing a video game, or forgetting a library book. I think it’s fine to associate these with negative consequences.

The lemonade stand experience of spending a dollar backfired in our game, which isn’t a great introduction to entrepreneurship.

Final Thoughts Lakeshore Learning’s Allowance Game

The Allowance Game is one of a few valuable first money experiences that I can recommend. The age on the box says 5+, and I’d say it’s good for 5-9 years old. You don’t want to go much younger than that because math can be difficult. You’ll want to keep it away from younger siblings as the coins could be a hazard – small parts that can wind up in a mouth.

It’s a fun way to learn the basics of cash and some ways that people can make and spend money. You can always buy a copy at Amazon. If this doesn’t seem like a game you are interested in, check out some of other games that teach kids about money.

Brian MacFarland has reached more than 10 million people on his personal finance journey to financial independence.  He’s been featured in the Washington Post, U.S. News and World Report, and Lifehacker.

Read more on the About page.

If you enjoyed this article please Support Kid Wealth

FamZoo Review: Allowance and Kid Money Made Easy

FamZoo

FamZoo is a company/app that makes managing money for kids easy. I’ve heard about them for years at various financial conferences. I didn’t have kids, so I didn’t pay attention. I only thought that it had a funny name. FamZoo got a lot more interesting once my kids were old enough to learn how to manage their money.

When I started Kid Wealth earlier this year, I had planned to write about specific companies and apps. FamZoo was high on my list. I went to a personal finance conference, and the CEO of FamZoo, Bill Dwight, was at a booth promoting FamZoo. He gave me the complete backstory of the company. Here’s the short version. Dwight was a very successful Silicon Valley engineer who decided to start something new and different. He combined his passion for software engineering and children’s personal finance. The result was FamZoo.

What is FamZoo?

FamZoo is a completely family money management system. You can think of FamZoo as a combination of a bank and a prepaid debit card. It consists of a parent account and one or more child accounts. Each child account can be further subdivided into spending, saving, and charity. It makes giving allowances easy. I can also give kids money for doing odd jobs or extra chores.

Children can spend money using their FamZoo card. It’s better than a traditional bank because they don’t feel the money is locked up and inaccessible. It’s an excellent way to let kids make money mistakes.

There is no credit feature or way for kids to rack up overdraft fees. The accounts are FDIC-insured.

Why FamZoo?

The Power of Compound Interest

I’m a big believer in teaching kids about compound interest. Unfortunately, banks aren’t paying interest rates that kids will notice. That’s why we should steal an idea from Bank of Dad.

The Bank of Dad idea is that parents can pay better interest than banks. FamZoo is perfect for parent-paid interest. Parents can set up accounts that earn significant interest (paid by the parent, of course). I could give my child 2% interest a week if I wanted to. It may not sound like much, but it is 280% a year. I recommend that you read my Bank of Dad article for an idea of what may be appropriate.

My kids only earn interest in their savings accounts. They have a strong incentive to put money there instead of spending. However, when they want to make a purchase, the money has to be in their spending account. Parents need to approve transfers, but I don’t see myself rejecting too many of them.

We’ve only been using FamZoo a short time, but I think I’ll set it up so that the charity account will earn double interest.

Automating Your Child’s Allowance

I tried managing my kids’ allowance with cash. It was a miserable failure. I never had the exact number of one-dollar bills on hand. Many times, I simply forgot. My kids reminded me sometimes, but they often forgot as well.

Now, I set up a rule in the application, and the kids get money pushed from my parent account to their accounts.

There are good arguments to be made that kids should start with cash. However, the world has moved to digital payments and apps. They’ll eventually have to be comfortable with managing their money this way. It doesn’t hurt to start early.

Using the FamZoo Prepaid Card

When the kids want to purchase something, they simply bring their FamZoo debit card to the store. Most likely, they’ve watched adults swipe a credit card. They probably already know how it works. Kids can check their balances by using the FamZoo mobile app. It’s available for iOS on the Apple App Store and Android on Google Play.

Since my kids are only 8 and 10, they don’t have a mobile plan, but they have tablets and wifi-only phones. As they become teens, they’ll be able to manage their FamZoo accounts at a store.

One nice touch is that the FamZoo has the kids’ own name on them. Kids under thirteen also have the parent name on them.

Getting Started with FamZoo

It takes some time to get started with FamZoo. For me, it took three weeks. It can take two weeks to get the debit cards. After that, it took another few days to set up the external transfer from my bank (USAA). The banks must do their transfer stuff, which takes a few days.

While it’s a bit inconvenient, there are very good reasons why it takes so long. FamZoo purposely doesn’t allow itself to pull money from your bank accounts. Instead, you push money from your bank account to FamZoo. This is great for peace of mind. No one wants to worry that a company is going to drain their bank account by pulling too much money out.

How much does FamZoo cost?

I’ve always been against paying bank fees. I’ve always felt that if I’m giving the bank money to lend out at high rates, the bank shouldn’t charge me money too. However, FamZoo is an exception. It makes my life so much easier that I don’t mind paying a subscription fee.

If you pay month-to-month FamZoo costs $5.99. It may not seem like a lot, but it can be a large percentage of a child’s allowance. I opted for the two-year pay-in-advance plan, which is $59.99. That comes out to $2.50 a month. It also covers our whole family.

One competitor, Greenlight, has a Greenlight Core plan similar to the FamZoo program. That plan has a $4.99 monthly fee, but it doesn’t seem to have a bulk purchase plan to lower costs. Over the two-year plan, I’ll save 50% with FamZoo.

FamZoo Competitors

FamZoo isn’t alone in the kid debit card space. I mentioned Greenlight above. There are also a couple more: GoHenry and BusyKid. I’m looking into exploring these options more. Stay tuned for reviews on them.

FamZoo Negatives

I found two things with FamZoo that were below my expectations. One was the time to get started. There’s an option to put more money in to start, but I didn’t take it. If I did, I think I would have been able to get started faster.

The second negative is that the company was founded in 2006, and it seems like much of the design is still from around that time. I’m more interested in functionality than design, but others may feel differently.

FamZoo Final Thoughts

We’ve been thrilled with FamZoo. It’s made handling allowances and compound interest so much easier for me. The kids love that it’s made their money more accessible than a stodgy bank account.

If you want a free bonus month, sign up with this special link.

Brian MacFarland has reached more than 10 million people on his personal finance journey to financial independence.  He’s been featured in the Washington Post, U.S. News and World Report, and Lifehacker.

Read more on the About page.

If you enjoyed this article please Support Kid Wealth

Just Saving My Money (Book Review)

Just Saving My Money

Mercer Mayer’s Little Critter books have been famous for nearly fifty years. When I was a kid, I had the PC Game Just Grandma and Me, an adaption of the popular book. Much like Berenstain Bears’ Dollars and Sense, the series has added a personal finance book for beginning readers.

Just Saving My Money is an I Can Read book. It’s at the “My First” level, which is best for “Shared Reading.” In short, it’s good to read with your kids. The sentences are short. Most of the words are short too. It’s 30 pages, but there are only a couple of those short sentences on each page. The illustrations help bring additional context to the story. I’d recommend it for a bedtime story.

Just Saving My Money Summary

Little Critter’s skateboard is old and broken. He wants a new one, but he hasn’t saved enough money for one. Little Critter does chores with varying levels of success. He earns a little money and some more from a lemonade stand.

When Little Critter thinks he has enough money saved, his dad brings him to the bank. They set up an account, and the bank steals all his money. Little Critter doesn’t like this at all. His dad tells him not to worry, and Little Critter trusts him. Little Critter has a book from the bank to keep track of his money. However, he doesn’t have enough for the skateboard. He does more chores to finally be able to buy the skateboard…

… but he doesn’t want the skateboard. He wants a robot dinosaur now. He has the money for the robot dinosaur and thanks his dad for teaching him how to save his money.

Just Saving My Money Lessons

Much like the Berenstain Bears book, there is only one main money lesson in this book. That’s enough for a four or five-year-old, especially one focusing on reading. The money lesson is very obvious. It’s mostly in the title: Save money for large purchases.

You could take a step further and point out that thinking about a purchase for an extra long time can help you evaluate if you really want it. In this case, Little Critter changed his mind about how he wanted to spend his money. The only thing that’s a little odd is that he went from wanting a replacement skateboard, which he could use for many years of fun, to a robot dinosaur. I love robots more than anyone I know, but I bet it gets boring once you finish with the 7-10 things it does. I feel like the skateboard was a more practical decision.

Just Saving My Money Read Aloud

Final Thoughts on Just Saving My Money

I like this book because it’s very age appropriate. If you are getting a beginning reading book, a money lesson is a good bonus. Unlike the Berenstain Bears book, the lesson seems relevant today. It’s priced at a dollar less ($4 vs. $5), so I consider that a great value.

Rating: ⭐⭐⭐⭐⭐

Brian MacFarland has reached more than 10 million people on his personal finance journey to financial independence.  He’s been featured in the Washington Post, U.S. News and World Report, and Lifehacker.

Read more on the About page.

If you enjoyed this article please Support Kid Wealth

Berenstain Bears: Dollars and Sense (Book Review)

Berenstain Bears Dollars and Sense

I grew up in the late 1980s with the Berenstain Bears stories. I forgot a lot about the specifics of their books. I certainly don’t remember Berenstain Bears books about money. Fortunately, this isn’t a case of my mind forgetting things. Stan and Jan Berenstain didn’t write Dollars and Sense until 2001. It was one of the last books that the creative team wrote about the famous bear family in bear country.

Before we start on Dollars and Sense, I uncovered an interesting detail in my research about Jan and Stan Berenstain. One of their first published books in 1952 was about how to fill out your tax form. It’s called Tax-Wise: A Pictorial Romp Through the Tax Form.

Is that as interesting as their 1960 book “And Beat Him When he Sneezes” ? I don’t know. Nonetheless, the Berenstain Bears is a best-selling children’s book series.

Let’s get to reviewing the book:

Berenstain Bears’ Dollars and Sense Summary

Books aimed at four and five-year-olds need to be focused on the basics. That means starting with physical coins and dollars. Dollars and Sense doesn’t disappoint. It draws in kids with the physical fun of coins (flippable, stackable, etc.) and transitions into more valuable dollars. Unlike many other early reader books, Dollars and Sense doesn’t explain why dollars are much more valuable than cents.

Instead, we have dad going on a rampage that he can’t give Brother Bear and Sister $5 and $10 for baseball cards and doll wedding dresses. Mama Bear comes to the rescue and suggests they give the cubs an allowance. I strongly suggest giving kids an allowance. Brother and Sister Bear proceed to make money mistakes. They spend all their allowance on the first day of the week and never save any.

One day, they notice that Papa Bear is balancing the checkbook for the family. Mama Bear explains that balancing the checkbook allows them to review how they spent their money and how much they have left. Mama Bear teaches the kids how to write checks, and the cubs suddenly decide to make a better spending decision. The book ends very abruptly after that.

My version of the book includes a series of tear-out checks and bonus stickers.

Money Lessons from Berenstain Bears’ Dollars and Sense

The big money lesson is to create some barrier to make kids pause and think about spending money. The book uses writing checks to accomplish this. I’m not a fan. I’m 46 years old, and I’ve never balanced a checkbook. I rarely write a check nowadays. I could write two or three a year. This feels antiquated. Not only that, but it’s spending a lot of time learning a system they may never use in real life.

Give Berenstain Bears’ Dollars and Sense a Try

The good news is that you don’t have to buy the book or go to the library to see if the book is right for you. I found a video on YouTube of a person reading the book out loud. I’m not a lawyer, so I can’t comment on the legality of essentially “giving away” the book’s contents, but YouTube hasn’t taken it down. There are several others, but I liked this one.



Additionally, I found that it may be free to borrow digitally on Archive.org. If you have an account (it’s free), give it a try.

Final Thoughts on Berenstain Bears’ Dollars and Sense

I really wanted to like this book, but I just can’t. There’s one important money lesson, think before you spend, but kids will probably learn that best by making money mistakes themselves. Getting kids to write checks for their allowance will likely make them equate managing money with chores/work.

There are better children’s finance literacy books to teach kids the value of a dollar.

Rating: ⭐⭐

I know this glowing review is going to make you want to spend your money right away. That’s sarcasm, but I always have to include the obligatory link to the book Amazon. If you do make a purchase I may make a few pennies to pay for hosting.

Brian MacFarland has reached more than 10 million people on his personal finance journey to financial independence.  He’s been featured in the Washington Post, U.S. News and World Report, and Lifehacker.

Read more on the About page.

If you enjoyed this article please Support Kid Wealth

How can I teach my kid to save and budget with their allowance

Do you want to teach your kid the noble art of saving and budgeting using their allowance as a superpower? To add a little spice we’ll cover it super-hero style. Maybe you can use some of it to inspire your little one.

Why It’s Important

  • Money Magic: Learning to manage money is like discovering the ultimate magic trick. You want them to be the next Houdini, not the disappearing dollar kind.
  • Avoiding Future Money Fails: Teach them now, so they don’t become the “broke magician” in their adult years. Financial magic wands won’t cut it.

Getting the Ball Rolling

  • Allowance Avenue: Start with a regular allowance. It’s their superhero suit, and it comes with responsibilities.
  • Budget Sidekick: Teach them the mighty power of budgeting. Create spending categories for their allowance. It’s like having different gadgets on a superhero utility belt.

The Thrilling Adventure of Saving

  • Super Savings Goals: Help them set saving goals. Want a new video game or a sparkly unicorn toy? It’s their treasure to hunt.
  • Saving Stash: Get them a cool piggy bank or a savings jar. It’s like their secret lair to stash their savings, away from pesky villains (aka spending temptations).

Budgeting for Justice

  • Needs vs. Wants: Teach them the superhero skill of distinguishing between needs (homework supplies) and wants (that giant ice cream sundae).
  • Spending Leagues: Create envelopes or jars for different spending categories. When the cash runs out, it’s mission accomplished. They’ll feel like true budgeting superheroes.

Sharing Is Their Superpower

  • Super Givers: Encourage them to share a part of their allowance with a cause they care about. They’ll be like Robin Hood but without the tights.
  • Feel-Good Vibes: Show them that giving is like a superpower that makes the world a better place. Who doesn’t want to be a hero?

And there you have it, the ultimate guide to teaching your child to save and budget using their allowance as a tool. Remember, every superhero has to start somewhere, and your little financial avenger is no exception!

For more fantastic tips and tricks on kids’ allowances and financial education, check out our resource.

Brian MacFarland has reached more than 10 million people on his personal finance journey to financial independence.  He’s been featured in the Washington Post, U.S. News and World Report, and Lifehacker.

Read more on the About page.

If you enjoyed this article please Support Kid Wealth

Should allowances be tied to chores or responsibilities?

Should allowances be tied to chores or responsibilities is an age-old debate. There are three schools of thoughts.

Allowances Tied to Chores:

  • The Basic Job Contract: Some parents treat allowances like a job contract. You do your chores, you get paid. Simple, right?
  • Teaches Work Ethic: It’s a great way to instill the value of hard work and earning money. Kids learn that money doesn’t grow on trees; it comes from effort.
  • Motivation Factor: When there’s a financial reward involved, kids may be more motivated to complete their tasks. It’s like a little monetary pat on the back.

Allowances Tied to Responsibilities:

  • Part of Being a Family: Some parents argue that chores should be done simply because you’re part of the family, not because you get paid. After all, you don’t get paid for breathing, right?
  • Life Skills: Pitching in with responsibilities teaches kids valuable life skills like cooking, cleaning, and teamwork. It’s like giving them a head start on adulting.
  • No “Chore Negotiation” Drama: When allowances aren’t tied to chores, there’s less room for haggling or complaining. It’s all about pitching in and sharing the load.

The Middle Ground:

  • Hybrid Approach: You can always strike a balance. Give a base allowance for being part of the family and contributing, but offer extra cash for additional chores.
  • Financial Education: Use allowances as a way to teach financial responsibility. Encourage kids to save a portion, share a portion (for charity, for example), and spend a portion.

Ultimately, there’s no one-size-fits-all answer. It depends on your family’s values and what you’re comfortable with. So, don’t be afraid to mix and match or adapt your approach as your kids grow and their needs change.

For more in-depth advice on allowances and parenting, check out How To Give Your Child an Allowance. And for a broader perspective on the topic, explore our other Allowance advice.

Remember, every family is unique, and the best allowance system is the one that works for you and your kids. Happy parenting!

Brian MacFarland has reached more than 10 million people on his personal finance journey to financial independence.  He’s been featured in the Washington Post, U.S. News and World Report, and Lifehacker.

Read more on the About page.

If you enjoyed this article please Support Kid Wealth

The Benefits of Giving Kids an Allowance: Teaching Financial Responsibility from an Early Age

benefits kids allowance
Image Source: Pexels

In this day and age of instant gratification and easy access to credit, it may seem old-fashioned to give kids an allowance. However, educators, counselors, and economists agree that an allowance can be a valuable tool for teaching children about money and financial responsibility. Not only does it provide them with firsthand experience in managing money, but it also helps build a sense of trust and responsibility within the family. If you’re considering giving your kids an allowance, here are some dos and don’ts to keep in mind.

Have a Plan: Setting Clear Expectations

Before you start giving your children an allowance, it’s important to have a plan in place. This means thinking through your stipend strategy and setting clear expectations. Ask yourself why you’re giving them an allowance, how much you’ll give, and how often. Consider whether the allowance is simply a benefit of being a member of the family or if it’s tied to specific responsibilities or achievements. Determine what expenses your kids are expected to cover with their allowance. By having all the details figured out beforehand, you’ll be better prepared to answer any questions your children might have.

“The clearer the deal at the outset, the greater the lesson — and the fewer hassles you’ll have downstream.” – [Reference Article 2]

Money Talks: Communicating the Plan

Once you’ve established your allowance plan, it’s crucial to communicate it effectively to your kids. Take the time to explain the rules, the reasons behind them, and any potential scenarios that might arise. You may even want to write down the plan, sign it together with your children, and display it prominently as a visual reminder. This will ensure that everyone is on the same page regarding the amount, frequency, and purpose of the allowance. Clear communication from the start will lead to smoother implementation and fewer misunderstandings down the line.

“The more often you talk about money with kids, the more knowledge you can equip them with when the time comes for them to manage their finances on their own.” – Investopedia

Teaching Common Cents: Using Allowance as a Learning Tool

One of the main benefits of giving kids an allowance is the opportunity to teach them about the value of money and financial responsibility. Allowing children to manage their own money from an early age can help them develop important skills such as budgeting, saving, and planning for the future. By giving them the freedom to make their own financial decisions, they will learn to be more independent and accountable for their choices. It’s important to let them make mistakes and learn from them, as these experiences will shape their understanding of money management.

“Kids need to handle it themselves, making their own mistakes.” – Great Schools

The Three S’s: Spending, Saving, and Sharing

When implementing an allowance system, it’s beneficial to introduce the concept of the three S’s: spending, saving, and sharing. Teaching kids to allocate their money wisely by spending a portion, saving a portion, and donating a portion fosters a well-rounded understanding of financial management. Encourage your children to think about their financial goals, whether it’s saving for a specific item or contributing to a cause they care about. By instilling these values early on, you are equipping them with lifelong skills that will serve them well in adulthood.

“This is an excellent way to expose them to the three most important things they can do with their money, and it’s a lesson that can last a lifetime.” – Great Schools

Chores and Allowance: To Tie or Not to Tie?

A common debate among parents is whether or not to tie allowance to chores. Some believe that connecting allowance to chores teaches children the value of hard work and responsibility. However, others argue that chores should be seen as a communal effort within the family and that allowance should be a separate entity. Ultimately, the decision is up to you and what works best for your family dynamics. If you choose to tie allowance to chores, be prepared for potential challenges when children don’t complete their assigned tasks. It’s important to strike a balance between teaching responsibility and avoiding a transactional mindset.

“Problems always crop up when — inevitably — kids don’t do the required work around the house.” – Great Schools

Don’t Deny Their Dues: Using Allowance as a Teaching Tool, Not a Punishment

While it may be tempting to withhold allowance as a form of punishment for bad behavior or poor grades, it’s important to resist this urge. The purpose of an allowance is to build trust, improve communication, and foster cooperation within the family. Using allowance as an unexpected disciplinary tool can lead to resentment and a breakdown in trust. Instead, find alternative ways to address behavioral issues while upholding the original agreement. By separating allowance from punishment, you can maintain a positive and constructive approach to teaching financial responsibility.

“No matter how tempting, don’t withhold allowance as punishment for bad behavior or poor grades.” – Great Schools

Show Them the Money: Consistency and Reliability

Consistency is key when giving kids an allowance. Regular and predictable payments help children develop a sense of responsibility and planning for the future. Establish a specific payment schedule and stick to it. Whether it’s weekly, bi-weekly, or monthly, make sure your children can rely on receiving their allowance on time. This consistency builds trust and reduces the temptation to negotiate or haggle. By prioritizing the payment of allowance, you demonstrate the importance of financial commitments and instill a sense of reliability in your children.

“One of the most powerful learning aspects comes from consistency: the regular, expected arrival of funds, on time and every week.” – Great Schools

Starting Early: The Age for Giving an Allowance

The question of when to start giving kids an allowance often arises. While there is no one-size-fits-all answer, many experts agree that children as young as three or four can benefit from a simple and understandable weekly allowance. By the age of five, many children already show an interest in money and understanding how it works. However, the decision ultimately depends on the individual child’s maturity and readiness to handle money responsibly. Pay attention to your child’s curiosity and desire to learn about money, and use your judgment to determine the appropriate age to introduce an allowance.

“By the time they’re 5, many already have started to save.” – Great Schools

Say No to Credit: The Importance of Controlling Spending

In a world of easy access to credit and online transactions, it can be tempting to give kids access to credit or debit cards. However, financial advisors strongly advise against it. It’s important to maintain control over your children’s spending and teach them the value of physical money. By requiring them to come to you for every expense, no matter how small, you instill the idea that spending should be a deliberate and conscious decision. If your children need to make an online purchase, have them reimburse you in cash immediately from their allowance. This way, they learn the importance of responsible spending and avoid developing a reliance on credit.

“You don’t want your young ones getting used to the idea that it’s easy to spend plastic money on the Intertubes.” – Greenlight[Reference Article 3]

The Path to Financial Literacy: A Stepping Stone for Future Success

Once children reach high school or even middle school, an allowance can serve as a stepping stone to more advanced financial concepts. As they grow older, consider opening a bank account with them as the custodian. This introduces them to the world of financial institutions, investing, earning interest, and balancing a checkbook. By having hands-on experience with money management from a young age, children will be better prepared to handle their finances as adults. The lessons learned through an allowance can provide a solid foundation for future financial success.

“Your kids will be far more likely to learn and understand those ideas easily if they’ve been living with the lessons of an allowance all along.” – Greenlight[Reference Article 3]

For more tips about how to handle allowances with your kids, see How To Give Your Child an Allowance and our general Allowance advice.

In conclusion, giving kids an allowance can be a valuable tool for teaching financial responsibility from an early age. By having a plan, communicating effectively, and using the allowance as a learning tool, parents can empower their children to make informed financial decisions. Whether tied to chores or given as a benefit of being part of the family, an allowance provides children with real-life experience in managing money. By emphasizing the three S’s (spending, saving, and sharing) and maintaining consistency and reliability, parents can set their children on a path towards financial literacy and success.

Brian MacFarland has reached more than 10 million people on his personal finance journey to financial independence.  He’s been featured in the Washington Post, U.S. News and World Report, and Lifehacker.

Read more on the About page.

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How much should I give my child for their allowance?

The amount you give your child for their allowance can vary widely depending on your family’s financial situation, your child’s age, and your specific goals for the allowance. There’s no one-size-fits-all answer, but here are some guidelines to help you determine an appropriate amount:

  • Consider Your Family’s Budget: Start by looking at your family’s budget to see how much you can comfortably allocate for an allowance. Your child’s allowance should not cause financial strain.
  • Age-Appropriate Amount: For younger children, a few dollars per week can be sufficient to teach basic money management. As children get older, you can gradually increase the allowance.
  • Covering Basic Expenses: You might choose to give an allowance that covers specific expenses, such as snacks or entertainment. For example, you could provide an allowance of $5 per week for these discretionary items.
  • Tied to Responsibilities: Some parents tie allowances to chores or responsibilities. In this case, the amount could be based on the tasks your child completes. Be consistent with the expectations and payments.
  • Educational Goals: Consider the financial lessons you want your child to learn. If you want them to save for specific goals, like a toy or a game, set the allowance at a level that makes achieving those goals possible.
  • Local Norms: Research what other parents in your area give as allowances to get a sense of local norms and expectations.
  • Allowance Components: You might choose to break the allowance into different components, like saving, spending, and giving. In this case, allocate a portion to each category.
  • Adjust Over Time: Be prepared to adjust the allowance as your child gets older, has more responsibilities, and their financial needs change. Periodically review the allowance amount to ensure it aligns with your child’s age and financial understanding.

For more tips, see How To Give Your Child an Allowance and our general Allowance advice.

Remember that the primary goal of an allowance is to teach financial responsibility, so it’s important to use it as a tool for learning. Encourage your child to save some of their allowance, make choices about spending, and eventually budget for more significant expenses as they grow older. It’s not just about the amount but also about the valuable lessons your child can learn through managing their own money.

Brian MacFarland has reached more than 10 million people on his personal finance journey to financial independence.  He’s been featured in the Washington Post, U.S. News and World Report, and Lifehacker.

Read more on the About page.

If you enjoyed this article please Support Kid Wealth

What’s the Best Age to Start an Allowance?

The appropriate age to start giving an allowance to a child can vary depending on your family’s values, your child’s maturity level, and your specific financial circumstances. However, many parents begin giving allowances around the age of 5 to 7. At this age, children are typically old enough to start grasping basic financial concepts and are eager to learn.

Here are some considerations for determining the best age to start giving an allowance:

  • Developmental Readiness: Children around the age of 5 to 7 often have the cognitive ability to understand basic money concepts, such as counting, saving, and spending.
  • Responsibility: Consider whether your child can handle basic responsibilities, such as chores and personal tasks. Some parents tie allowances to chores as a way to teach the connection between work and money.
  • Financial Education: The age at which you start an allowance can be an opportunity to begin educating your child about financial matters, including saving, budgeting, and making choices.
  • Family Values: Your family’s values and beliefs about money can influence the age at which you introduce an allowance. Some families choose to wait until their children are older, while others start earlier.
  • Needs and Goals: Assess your family’s financial situation and goals. If your child has specific financial needs, such as saving for a special purchase, it might be a good time to start an allowance.
  • Communication: Ensure that you can communicate clearly with your child about money and the purpose of the allowance. Discuss your expectations and the rules surrounding the allowance.

For more tips, see How To Give Your Child an Allowance and our general Allowance advice.

Remember that an allowance is not just about giving money; it’s an opportunity to teach financial responsibility and life skills. Regardless of the age you choose to start, it’s important to have open and ongoing discussions about money with your child, so they can learn to manage their finances effectively.

As your child grows and matures, you can adjust the allowance amount and the financial lessons you provide to match their changing needs and responsibilities.

Brian MacFarland has reached more than 10 million people on his personal finance journey to financial independence.  He’s been featured in the Washington Post, U.S. News and World Report, and Lifehacker.

Read more on the About page.

If you enjoyed this article please Support Kid Wealth