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Poll

How do you Teach your Child about Money?

Pay them.


There's a strong argument out there that suggests an allowance is the best way to teach a child financial responsibility.  Remember, it's all in how you plan to do it.

The child should be old enough to count money.  If you want a successful allowance experience you need to structure it right from the beginning.  Part of this is knowing that your child understands how much a quarter is worth.

Make it clear what the money is for, driving home that they are expected to save some of it .  Younger kids, ages 7 to 10, shouldn't be held accountable for items like school lunch money as part of their allowances, but it's not a bad idea for older kids (and it has the added benefit of fewer payments changing hands).

Some experts say linking household chores to allowance is a mistake.  Kids should be expected to help around the house because they are members of the family, not because they are paid. 

Some parents complain that giving their kids allowances puts the parents in a position where their kids are constantly begging for raises or advances.  These parents are missing the point.  Allowance is supposed to be a teaching tool and negotiation skills are an important part of that, so instead of grimacing every time they hit you up for a raise, decide when the time is right and engage them in negotiations. 

Perhaps the toughest decision is how much to give in allowance.  This will of course be determined by personal values, family income and common sense.  The trick is not to let your child influence the amount by telling you what their friends are getting...they'll most likely bring in high figures.  Many parents like to give the equivalent in today's dollars of the allowance they received at the same age.  Assuming you are financially comfortable with that, it can be a good solution. 

Source: money.cnn.com/