How to best use allowance to teach kids about money

Probably the most often asked question by parents is “Should I give my kid an allowance?”    There is no simple answer, but giving kids the experience of handling their own money is a great teaching tool.  The problem with allowance is when it is given with no responsibility involved.

Kids who get allowance that is matched to certain spending areas or in exchange for chores do much better with money once they are out on their own.  Read more about what studies are proving…

…By Eileen Ambrose, The Baltimore Sun

The conventional wisdom is that allowances make children responsible money managers as they learn to budget so they don’t run out of cash.

But Lewis Mandell, professor emeritus of finance and former dean of business at the State University of New York in Buffalo, says that’s not always the case. In fact, says Mandell, who has studied financial literacy, certain allowances may even be hurting kids.

According to Mandell, high school students who didn’t get an allowance performed better on a financial literacy test than those who did, especially teens who received stipends with no strings attached. And children receiving unconditional allowances — no chores required — also were less motivated to get a job or go to college, he says.

Read more of the article:    http://bsun.md/y1mb4y

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