To learn how to manage money, children need some money to manage, typically from an allowance you provide and eventually from doing small jobs for friends and neighbors. As a first step, you’ll have to decide how much the allowance should be and whether it should be linked to jobs they are required to do.
As fair warning, both are matters of heated debate, so it’s worth doing some research and weighing what you’re comfortable with. For example, if you expect an older child to use some of the allowance for necessities, like clothing and school supplies, you may decide she needs a larger amount than if you’ll be paying those bills yourself. Whatever you decide, though, remember that the overall goal is to use the allowance as a way of teaching how to create a spending plan and live by it.
One popular suggestion, especially for younger children, is to illustrate the concept of budgeting by using three clear jars that represent current expenses, savings, and charitable giving. Separating cash into jars makes it easy to compare the results of spending, saving and giving. But don’t wait too long to open a savings account for their saving goals! Be sure to stop by your local Norway Savings Bank location for more information about savings account options. We want to help you and your child make the best choices to meet their savings goals.