What stock momma mentioned about combination of allowances and earned income sounds about right. set allowances for “small items.” If they want more for a particular thing that’s not covered, they need to earn it themselves.

You know SkyeBlue, if he really wants to spend it for the sake of spending money, let him? Regardless if you have a set allowance for your son or not, there will be a time that he’ll wish he has that $20, and would wish he saved it.

$20 is a lot for a 7 year old, though. I know it sounds silly, but I think explaining to him that he should save it, just incase he needs it later on for something he really wants, may come across better—instead of say, telling him to not spend it at all. *shrug* any form of delay gratification and saving mentality can add up if applied frequently enough.

anyway, the younger you start the better things will be later on, regardless of the method, I think (yes, maybe even the beating, minus the childhood scars and all that).

btw I totally missed this but the reader also ask for websites that may teach kids about money.

that’s a fairly tough one, the only thing I can think of is orangekids.com from ING Direct. It covers topics on saving, investing, spending, and other general money musing (such as earning your money, etc.). Fairly decent site, though I have no idea how interesting it could be for a kid.

edit: oh yeah, practicalmoneyskills.com from VISA is also another good one for the older kids.  I just realized it after looking at my free mousepad from them. lol.

Here’s a quick look at a few things from the MoneyBlogNetwork (and beyond) that caught my eye over the past week…

MightyBargainHunter asks if one should pay down their mortgage or sock extra savings away in their ING Direct account (click…

Kid: I dunno, I just want to SPEND IT!

Parent: [smack][smack]

Kid: On second thought, I think I’ll just open an EmigrantDirect account. At 4.6 points, I’m sure to beat inflation!

Parent: Barely. [smack][smack]

Kid: Well … maybe I’ll invest into some quality index funds.

Parent: You goddamn right you will.

That said, I’m a big fan of parenting by example. If you talk to your kid about the financial choices you’re making and why, they’ll have some idea how to approach financial decisions. It doesn’t work to just say, “you can’t have an iPod.” You have to say “you can’t have an iPod because it costs the equivalent of one month’s worth of groceries. We don’t have enough money to buy both and still meet our other obligations, and it’s more important to buy groceries than gadgets”.

That’s a very clumsy example, but I think you can find real-life situations to teach kids important lessons.

Also, I like the idea of giving an allowance but having my son divide his allowance into different pots. Maybe 25% each to long-term savings (college), charity (he gets to choose which one), short-term savings (for a large toy or something like that, and instant gratification (small toy, candy, whatever. But I don’t know if that will really teach him to balance priorities, or just make him rebel against my making him control his money in the way I think is best. I’ll just have to feel my way, I guess.

When I was a kid, my brothers and I got a regular allowance, and we were expected to do work around the house and yard. When we moved to an acreage and started a tree farm, the work increased dramatically, but the allowance did not, which left me feeling rather used. I’d spend all day out working the trees, or in the summer work my way through a long list of chores that took most of the day to complete, every day, and still get my puny allowance that was the equivalent one record album (back in the days of vinyl) per month.

Children who are paid by the job make a direct connection between work exerted and money earned. However, it may affect their altruistic tendencies if they expect to be paid for every little thing they do. “Junior, will you empty the dishwasher for me?” “Sure, if you give me a dollar.”

A combination may be a good solution. Kids may get a monthly “salary” as compensation for an agreed-on set of weekly chores, but be allowed to earn extra for big jobs. I kind of did that with my boys, but I wish I’d done it more formally. I wouldn’t pay kids just for emptying the dishwasher when they’ve been asked. But for large chores like washing the car, or seasonal chores like weeding, parents and kids can come to an agreement on what those jobs will be worth, and when they should be done — that is, washing the car when the parents ask, not running out and washing it three times in one afternoon because Junior wants to go out to the movies that evening and needs the money.

Parents and kids also need to be clear about what parents will buy for their kids and what kids must buy for themselves out of their own money. Kids are quick to spend other people’s money, but when it comes to their own, they can be downright misers. Junior sees something in the store and says, “Can I have that?” My response is, “Did you bring your money?” That produces a downcast look and a “no,” and pretty soon Junior decides he really can do without that thing that looked so wonderful. Occasional treats are fine, but they should be initiated by the parents wanting to give a treat, not by the children’s begging for one.