'Llowance Lowdown

On the off chance that my recent research can get your family's child cash conversation kick-started, here goes:

1)Many people recommend an allowance of a buck per year of age, something large enough that a child can purchase tangible items of interest and can also benefit from saving money. She and she alone should decide how to use this money. She can spend, save, or share it -- and will benefit from hearing your beliefs -- but she must be empowered to make her own choices. To make it worth her while to save, pay her an exorbitant interest rate (at least 6%, steep but allows the money to grow visibly in child time) once a month, a la The First National Bank of Dad, a great book on teaching kids about finances that also provided the next point of advice.

2)Distance allowance from parental dollar hostage-taking from the get-go. It is tempting to threaten to take it away and effectively banning linking the allowance to behavior is important. That would be boring. And kids should have to participate in household tasks as part of a family team effort. Choosing not to do chores (ie I don't need that stinking allowance) shouldn't be an option.

3)Optional jobs offered as extra money-makers should be just that, optional, above-and-beyond jobs she can opt to do to earn extra $ above and beyond her allowance. These tasks will come as a set; just like there are parts of your employment you dislike but do anyways, she can't pick and choose from the xtra joblist. It's all or nothing. {I got this idea from Michelle Singletary -- I totally love her column The Color of Money and was reading her archives last week while on the hunt for books for my 10-year old entrepreneurial cousin (this and this look promising).}

4)Any ideas your kid comes up with that save your family money should go directly into her pocket, ie if she finds us a $1 off coupon for her favorite yogurt drinks, give her the dollar. This idea comes directly from my maternal grandfather. I totally loved when he did this for me as a kid. I still clip coupons.

Here's hoping that lots of discussion about money will help our kids have a healthy relationship with cash -- respect for the power of money to do good, to make our lives easier, and to provide freedom of choice and freedom from want.

Also, this via Green as A Thistle: by all means save, but only with a figurative piggy bank -- hoarding coins is bad for the environment. Think about that when you are fuming about the person in front of you in line (me?!) fishing around for exact change.