While browsing de.lico.us for stories about animal intelligence [blatant plug], I stumbled upon a financial anecdote at A Room of My Own:

Sarah has been eager to earn some money; she has a Jones for a new video game and her “account” (where we keep track of deposits — her allowance — and withdrawals) is into negative integers. I gave her a job to earn $5+. It was nothing onerous. She was enthusiastic at first. She worked for a few minutes (chattering more than working) then got bored. She wanted an easier, “more exciting” way to earn money. Groan. How does one help kids develop a work ethic?

I never wanted to be one of those parents to pontificate about “when I was a child…” But it is true that, when I was her age I worked hard at a paper route after school. I can remember being out well after dark and even trudging through serious snow to deliver the papers. The thing is … I loved it. It was probably the first thing I’d ever been successful at (other than reading). And it was the first time I’d ever really worked hard.

It is clear to me that children need meaningful work, something more than a bit of daily chores. It challenges them and gives them a sense of purpose. But how do I accomplish that?

This mother’s desire to teach her daughter the value of money is admirable. It’s important for kids to learn how money works in the real world. I like that she’s interested in finding “meaningful” work for her daughter, and wanting to demonstrate the connection between work and income.

Teaching kids about money when they’re young may prevent problems later in life. Earlier this week at MSNBC, Laura T. Coffey wrote about “what to allow when it comes to allowances”.

Got money worries in your adult life? If so, be honest: Are some of those worries related to stubbornly bad money habits you find tough to shake? Well, that just might be your parents’ fault. Financial experts say the money troubles that plague many of us as adults often stem from the way our parents raised us to view and handle money.

My parents modeled poor money habits. They didn’t do a good job of teaching my brothers and me about money via allowances, either. We had them from time-to-time, but they were irregular, and we could whine and moan to get more money. In her article, Coffey recommends that parents:

  • Pay an age-appropriate allowance.
  • Allow her to make her own choices and her own mistakes. It’s better for her to learn a lesson with $10 as a kid than with $10,000 as an adult.
  • Pay him in cash. Kids are more apt to learn from the real, physical stuff insted of something abstract like a prepaid credit card.
  • Give her specific financial responsibilities and don’t bail her out.
  • Be punctual about payday.
  • Be careful about tying an allowance to routine chores. Some experts warn that this can create a mercenary attitude in children where they want to know how much they’ll get paid for doing a chore. A better approach is a “salary” type allowance. Some people view chores as part of a family obligation and refuse to tie them to an allowance at all.

Coffey has another article at MSNBC that offers ten steps to creating a successful allowance. Also, here’s a piece with 15 ways to teach kids about money. Finally, an excellent way to get kids innterested in making money is to introduce them to entrepreneurship. What Color is Your Piggy Bank? is a slim book aimed at kids aged 10-14 who might like run their own business.

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