Kids and money: Allowance helps teach children about money management

The Associated Press ~ staff The News
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LAS VEGAS - There's a children's book about the Berenstain Bears having a case of the "gimmies." They want what they want and they want it now.
If there is a sequel, my daughter would win, hands down.
I took her to a store with the intention of buying her school uniforms. She had her eye on a pair of hideous, white sandals with a small heel.
She begged. I stood firm. Then she told me she was going to cry.
She did. I was mortified. She continued to beg and even told me she wished she had a different mother who would buy her things.
I didn't cave.
The next day, at another store, she knew better than to pull the "I want it now" routine, but still asked for random things at the checkout counter.
Usually, my kids know we only get special gifts for birthday and Christmas. But we had just returned from a trip to see their grandparents, and let's just say a lot of gifts were given and they were indulged quite a bit.
I have tried explaining the difference between being at their grandparents' house and being at home, but really I think it's time my almost-six-year-old start learning about money.
Six is a great time to start receiving an allowance, according to Janet Bodnar, editor of Kiplinger's Personal Finance Magazine, who also writes a web column called "Money-Smart Kids."
"Kids will spend unlimited amounts of money as long as it's yours," she said. But "kids are really cheap when it comes to their own money."
Bodnar suggests giving children a weekly allowance equal to half a child's age. And, she said, don't attach it to chores. That way, they won't think they have to be paid for doing things like making the bed. They can always do extra chores, such as weeding the garden or walking the dog, to earn more money.
The allowance should be given to the child to use to buy the items they really want. If they don't have enough, they don't get the goods, Bodnar said.
"You give her that responsibility with the money," said Bodnar.
Parents also might want to require that their child save a certain amount of the allowance every week.
Elisabeth Donati, who runs a financial camp for kids in Santa Barbara, Calif., called "Camp Millionaire," suggested setting up money jars for kids as a way of allocating and managing their money. Allowance can be split between jars of spending, savings, charitable and education.
She said taking my daughter to volunteer at a charity or visit with less fortunate people would help teach her that people don't have everything.
Donati, author of the book "The Ultimate Allowance," also suggested that parents give their children the money they are already spending on them. For example, if you buy your daughter hair bows or action figures for your son, the money for those items is given to the children. The child decides when to buy the item.
But if they spend the money on something else and still want the item, the parent would say something like: "How can I help you make a better decision?"
As the child gets older, he or she would be fully in charge of the money spent on them.
As far as my daughter and her case of the "gimmies," Bodnar assured me that I really do have the power. I just have to draw the line in the sand and always give a reason as to why I won't buy something for her.
Setting the buying boundary now will pay off later, she said.
My daughter is still asking about the white shoes. She wants to know if we can get them when they go on clearance. It's still a no.
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Organizations: Kiplinger's Personal Finance Magazine

Geographic location: LAS VEGAS, Santa Barbara, Calif.

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