Children need guidance with money

Recently a reader approached me with the following question: “Dear Dr. LeCrone – I have two lovely grandchildren ages 9 and 6. Their father, my son, and his wife love them very much and seem to be making every effort to provide a home for them that is healthy and happy. However, my husband and I see a problem that seems to be getting worse and wonder if you could address this in one of your columns. The issue revolves around the circumstances, if any, in which they should give their children money. My son seems to be very conservative and reluctant to reward the children monetarily for their assigned chores etc. and my daughter-in-law is apt to give them money for most everything they do around the house, for grades, etc. My husband and I believe the children are not learning healthy attitudes about money. Additionally, could you address issues about how children use, save and to value money.”

Helping children learn the value and management of money is a very important part of their development. Parents should bear primary responsibility for teaching these skills because, consciously or unconsciously, parents serve as models to their children in money management.

Although paying children for grades, household chores, helping other family members, etc. can be overdone some monetary rewards can be appropriate and useful. A reasonable allowance can serve as a motivational tool and provide a beginning model for the world of work later in a child’s life. Paying a child for grades is often of questionable value but in some cases, might be appropriate. Following are some suggestions that might be helpful:

• Set up a reasonable amount for a child’s allowance. Discuss what duties must be performed to receive the allowance, keeping them in line with the child’s age and ability.

• Be sure children understand their duties. Cooking, ironing, gardening, repairing, building, etc., can be quality time if the parent and child work together. The best pay is a hug, smile or pat on the shoulder. Appreciation must be shown upon the completion of any task, no matter how small. Children need to understand that the family requires each person to pull his or her own share of the load.

• Parents may want to pay children for extra work. If an unexpected job arises, family members can discuss the cost of hiring someone to do it or pitching in and doing it themselves. The savings can be shared by those participating in the job.

• Another part of the introduction to the world of work is the use of money. Parents should begin the process at an early age. A piggy bank and savings account can lead to a checking account, and later to an investment club to learn the basics of finance, stocks and bonds. Work that will use a child’s talents and provide the necessities and pleasures of life is a goal all parents should strive for.

Harold H. LeCrone, Jr., Ph.D. Copyright 2001