Children Making Money

Children Making Money

Financial literacy isn't a lesson your children will learn at school. As the parent, you need to decide what money lessons you want your children to learn and how you're going to teach them. Children tend to gain money by asking for it, from gifts or from an allowance. Each of these forms of childhood income has a different lesson to teach. Whether or not you give your child money upon request is a personal choice for each parent.

Children often receive their first money through birthday gifts, money from the tooth fairy or generous relatives. Your decision is whether you should allow your child to spend all of this gift money, save it all, donate it or a combination of these actions. The precedent you set with gift money will impact your child's perception of how money should be treated.

Allowance can be handled a number of ways. Some parents give an allowance with no strings attached to teach younger children the basics, like the names and value of coins, or to teach older children money management techniques. If you feel strongly that money must be earned, then you'll need to tie the allowance to specific chores and standards for those chores. Finally, you'll need to determine how your child is allowed to spend their allowance. Some families immediately institute the habit of putting a third into long-term savings, donating a third to charity and letting the child spend the rest.

Making conscious decisions about how your child handles the money he or she receives is the foundation for a good financial education.

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