Setting kids up for financial success with an allowance
The Lift’s Certified Financial Planner Michelle Buria says that allowance is a great tool to help kids build good financial habits. “They say that financial health is 20% knowledge and 80% behavior. So let’s get these kids our right in the early years with good financial behaviors,” she tells us.
An allowance gives parent’s an opportunity to show kids what things cost. “You don’t want to have an allowance tied to chores. I don’t even like that word,” Michelle tells us that while there are some responsibilities that go along with being part of a household that they shouldn’t get paid for. “Allowance is something beyond that.”
It also starts an important conversation when it comes to wants versus needs. “We need to teach kids why they need to earn money,” Michelle explains. When you take your kids shopping, make sure they bring their money with them so they can see what things cost.
And when you give kids their allowance, Michelle recommends making sure they plan where it goes. The three categories to consider: spend, save, and share.