Why do you start the process so early?

Kids start asking questions about money very young. They’re already being targeted by advertisers by the time they’re two. You should expose them to the idea that money can be used for more than just spending. Financial education for kids starts at a young age.

How do I help my child set their first goal?

A 4- or 5-year-old can save for a goal and it’s a good idea to keep the time horizon short – 4 to 8 weeks. Any longer and they’ll start to lose interest. For example, saving $3/week for 8 weeks for a scooter is a sensible initial goal for a child.

What if I’m not comfortable teaching my kids?

That’s why we distill our messages down to the basics. Part of this process is your own evolution. Understanding our three core concepts – identifying the difference between needs and wants, making smart money choices and saving for a goal are all things you either do or can start doing immediately. Behavior change, if necessary, is a good idea because your kids will be watching you for mixed messages.

Why wouldn’t you tie chores to an allowance? Aren’t you just encouraging handouts at that point?

I addressed the question of whether or not you should tie chores to allowance at length in this blog post. In short, allowance is a tool to give your kids experience handling money. Research strongly suggests that financial experience is more important even than financial education. Chores teach a different lesson – that work is required to earn money. Chores, commission, whatever you call it, can be incorporated for those “above and beyond” chores, those which you wouldn’t require your child to do whether or not you were providing them an allowance. 

When should I start an allowance?

This largely depends on the kid. 5-year-olds are developmentally ready to start making more intelligent money choices so that’s a good time. But a younger sibling might be ready at four because they’ve been observing the older one. Try it for a month. You can always stop and restart if you don’t feel he or she is ready.

My daughter wants an $80 pair of shoes. She has enough in her Save jar, but has depleted her Spend Smart money. What should we do?

This is actually something we encountered and we have a rule in our house. If you want to pull money from your Save jar for a purchase, you need to wait at least a week before making the purchase. If your child really wants the item a week later – a surprisingly long amount of time for a kid – then they can move the money and purchase. Of course, you may use two weeks or a month. Whatever is most in line with your values.

What if my son or daughter is ignoring the Share jar?

It’s normal if the Share jar is sometimes forgotten. Just look for opportunities for your child to use that money to make a charitable contribution. Check out this blog post about the opportunities that abound.

Won’t this allowance start costing me a lot of money for my teens and tweens?

Art of Allowance podcast guest and financial coach Kelsa Dickey put it this way, “the allowance is not a new line item in your budget.” Or even if you don’t budget, taking the money you’re already spending on your kids and making the decisions for spending on clothes, gifts, communication, food and whatever else you’d like to add isn’t additional money. In fact, giving them responsibility — making it their money — often means that they are more responsible and will spend less.

If you’d like to hear more on this subject, listen to my conversation with Kelsa Dickey.

Mom Melissa Disharoon explains how her family dynamic changed with an allowance in this conversation.