Never just give your kid money. Give them an allowance! This is the primary way that they learn to manage money when they are young. There are no money shows for kids on television and commercials lead them to believe they can just spend, spend and spend!
Furthermore kids are now encouraged to spend money at a younger age than ever. It is easy for them to develop delusions about where money comes from and how it should be handled.
In fact most parents don’t realize that their kid does not know a thing about money until they become adults and need a loan. If you do not want to start supporting an older kid that has flown the nest but is in debt then you need to teach them good financial habits when they are young.
An allowance works because they can make mistakes using a minimal income. Knowing the limit of available funds forces kids to think about how much tings cost and to make wise choices between the things that they may. They also may have more appreciation and respect for the things they buy if they know they cannot be replaced.
You should give your child an allowance as soon as they show both an interest and an understanding about the concept of money and the fact it can be exchanged for goods. Most people say that you should give them a dollar for each year of age and that you should give them this once a week. However some other money experts say it is a good idea to check with other parents in the neighborhood to see what they give their kids as an allowance.
You might also want to sit down with your child and make a list of what they are expected to pay for with the allowance. This solves the conflicts that come up in stores and as they go out for friends for snacks or to the movies.
Keep in mind that when kids do use money they use it in three ways â€“ spending, saving and sharing. Consider this when you are coming up with the amount needed to give them money.
If you want you can also tie their allowances to chores. However some people that you should not do this as this means they will be expected to be rewarded for things they should just do anyway like make their beds. It is a better idea to punish them if they do not do chores rather then pay them for doing normal housework or duties associated with regular self-care.