Released March 27, 2008
STILLWATER, Okla. -– Giving children an allowance can help teach them to be responsible financial managers.
Sissy Osteen, Oklahoma State University Cooperative Extension Service resource management specialist, said even very young children can gain valuable money management skills that involve spending and saving.
“Some parents simply may give their children a set amount for allowance. Other parents require the children to ‘earn’ the money by doing extra chores around the house,” Osteen said. “This is a personal decision for each family.”
To begin with, set a base amount for each child when you establish the allowance system. It is important to stick to this base amount.
If a child is requesting more money, create a list of jobs around the house that the child can do to earn additional funds.
“Make sure the list includes a complete description of the task to be done so there aren’t any questions when the task is finished,” she said. “Set a specific amount for what each individual task is worth.”
Osteen pointed out that even young children can learn that money is a payment for services. Children as young as two or three can help with outdoor chores like pulling weeds and raking leaves, even though they sometimes make more of a mess. Elementary age students can collect cans and other recyclables to turn in for money. Older children can baby sit and tutor or give lessons to others for payment.
“No matter how you set up your system of giving money to your children, encourage them to start making buying and savings decisions,” she said. “Help your child develop a savings and spending plan. The savings plan should include both short- and long-term savings goals. The spending plan should include expenses the child is expected to incur, such as entertainment, school lunches or clothing. Be sure to include any charitable donations or church tithing in the plan. If your child does not follow the spending plan, don’t bail her out. Sticking with the spending plan will teach her responsibility.”
Have children write down their spending and savings goals. This recordkeeping will help them keep track of progress toward reaching their goals.
“Learning money management skills at an early age will be a big advantage to your children later in life,” Osteen said.
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Contact: Trisha Gedon, (405) 744-3625, trisha.gedon@okstate.edu
