Teaching your children about money

[Julia]

What do you do to teach your children about money and what it is used for? I know my nephew thinks money is a piece of plastic that Mommy and Daddy swipe at the counter, so I got him a coin bank so he can understand a little bit.

On The Simple Dollar, a blogger asked about allowance and when to start. When is a child ready for an allowance?

There seem to be lots of good comments for the age range suggested and for waiting until the child is older. I did not receive an allowance as a child, my parents bought anything I requested as long as it was reasonable. I don't know if I agree with making children split up their allowance since any large savings should be done by the parents. Children really just want that one item right now and when they are older (teenage) I can see having them split up their funds since they most likely have a job.

What do you think?

[Alex]

We give our 5-year old son an allowance for doing small chores around the house and doing things on his own like making his bed, getting ready for school, etc. He gets $0.05 for each item he does and at the end of the week we total up all the chores he did and pay him his allowance. He usually gets between $1.75 and $2.25 per week. At the end of the month I take him to our credit union and after he runs his coins through the coin machine he must deposit half of his allowance into his savings account. The other half he gets to spend on whatever he wants.

This has worked for us over the last year and he doesn't mind depositing the money into his account. So what are we going to do with his money he has in his savings account? We plan on letting him decide what he wants to use it for once he is into his teen years. As long as we continue to keep this a habit and teach him about making wise financial decisions we believe he will make good decisions on how he will spend it. Only time will tell...