Dollar Wise Kids

Make a Budget

Don't just hand out cash. Help your child set goals for her money. Does she have her eye on a Wii or (yikes!) tickets to an upcoming Justin Bieber concert? Get out the calculator and explore various saving scenarios together. Some kids are naturally thrifty and will want to sock away every penny, while others are the spendy type. Both styles have virtues, and consequences, so allow her to experience her chosen approach. Giving your child her own money will also encourage independence and give her a measure of freedom. In keeping with that spirit, try to take an advisory role. "An allowance should have relatively few strings attached to it," says Lawrence Balter, Ph.D., a psychologist and parent educator in New York City. After all, that's how she's going to become a savvy consumer. Even if you think your child is frittering away her money, take a deep cleansing breath and try to let it go. Buyer's remorse can be a useful lesson. But you can and should set some limits. If something is against your rules or beliefs, don't accept the "it's my money" retort. Things like World of Warcraft (too advanced), skateboards (too dangerous), or a hamster (too much responsibility) are all examples of perfectly acceptable places to draw the line. Similarly, if you don't allow unlimited candy or soda, having an allowance shouldn't give your kid carte blanche to disobey your family's rules.

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