Teaching How to Give

Many families want to teach their children how to give a part of their income to charity. The Moes provide some guidelines with the 80/10/10 percentage formula: 80 percent of the money going to what the child wants, 10 percent to savings, and 10 percent to giving.

Help your child decide which cause is worthy of their donations. Year-end reviews and raises should take place at the beginning of each new school year. As children mature and show a responsible attitude towards their finances, consider including enough money to cover their weekly school expenses and other necessities.

Dr. Beeghly recommends waiting until the child reaches at least 10 before incorporating this aspect; "The ability to plan for the future develops as the child matures. It is hard for children to plan for their needs. There is a danger that they would squander their money." However, experts agree that by junior high, parents can introduce the concept of budgeting. Some parents also give their teenage children quarterly clothing allowances.

For those purchases children want to make that will not be covered by allowance, the Moes recommend adding another dimension to the program: earning. In addition to regular chores of making beds, washing dishes, and so on, devise some other household jobs your child can do for pay. These should not be "busy work" activities, but something important that has to be done.

Children should not be paid for doing the work unless it is done in an acceptable manner. They have been hired by you to do the job just as any professional is, and they should be expected to do it well.

In addition to receiving money for their efforts, the children will develop pride in their accomplishments and satisfaction in knowing they earned the money they needed.

Tweens and Teens

Many tweens and teens are budding entrepreneurs with ideas for profitable endeavors. Encourage and support their efforts, but allow them to shoulder the bulk of the responsibility. In other words, if they want to start a lemonade stand, buy the lemonade, but let them make it and sell it. It might be wise to ask them to pay you back for your initial investment as well.

"All children's personalities differ," says Dr. Beeghly, "and how they handle money will differ as well. Some kids are cautious and might be more willing to save while others will spend." Dr. Beeghly concludes it is the family relationships and the modeling of the parents which will determine a child's money sense.

In a recently published article in MONEY magazine, the objective of an allowance was defined as a way to develop financial self-reliance in children. "By the time your child is college-age he should be able to manage a year's expenses on his own."

Children who develop financial responsibility early will reap its benefits the rest of their lives.