Money May Grow on Trees but Keeping It Is Found in the Roots

According to the AICPA (American Institute of CPAs), 61% of U.S. families give their children an allowance. Their study found that the average allowance is $780 a year or $65 a month. For 89% of these families, the allowance comes with an expectation of doing chores. 54% of families start their allowance tradition before their children are age 8.  

What do children do with their monthly money? They spend it for the most part. The study found that only 1% of the money is saved. Do you see how this can lead to poor financial money management as an adult?

What can you do to join or increase the 1% savers in your family?

1. Give your children cash. The allowance should be seen so that children can perceive its reality. This makes money tangible rather than keeping it abstract or conceptual.
2. Have rules around this gift. Talk about the 5 .S.I.D.E.S. of Money (saving, investing, donating, earning and spending) with your children. Provide them with a piggy bank in which the cash is deposited (representing money earned.) Then allocate the money in there to the remaining four areas in agreed to percentages and purposes.
3. Set aside time once a month to talk about how your children have allocated their money for the month.
4. Ask them a series of questions which can include:

• What have you learned about saving, investing, donating, earning and spending, and donating?
• What area needs to be strengthened and fortified?
• What area is the easiest for you to use?
• What frustrates you about money? What would you like money to do for you?
• What is money for? How is your money supporting that?
• If you look at the money in your main piggy bank as earnings, how else can you contribute to that pile?
• How can you include your friends in money conversations and money activities?

It’s important to ask your children about their use of their money so they can begin to develop their sense of purpose and responsibility with it.

Money may grow on trees but keeping it is found in the roots. Build deep roots to your children’s life with money and you will see them carry these habits and behaviors into their adult life.

Do you provide an allowance? What are the expectations around it? Do you talk about money with your children? How often? What about?

Leave a comment. We’d love to hear from you on your views and experiences with allowances.

Posted by focusyourlifetips on April 10, 2014

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