Teaching Teens Financial Responsibility: What Should They Have to Pay For?

The annual cost for the average couple to raise a 14-year-old in 2012 was $17,730, according to the USDA’s Center for Nutrition Policy and Promotion. It cost $18,380 to raise a 17-year old that same year, and in a house with two teenagers and a 12-year-old, the annual cost to raise all three children rose to $33,590. How much of this financial load should teenagers be asked to bear? If you’re raising one or more teens old enough to work or drive, you might be wondering which expenses they should start paying for themselves. Here’s a guide to get you started.

Build on Your Budget

Approach your children’s budget as a reflection of your overall household budget. Financial advisor Elizabeth Warren advocates following a 50/30/20 budgeting policy: Each month, allocate 50 percent of your income to necessary expenses, 30 percent to discretionary spending and 20 percent to savings and debt reduction.

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Kids and Money + Making Fiends + Drug-Free Kid

www.amazon.co.ukJoline Godfrey, author of Raising Financially Fit Kids.
Topic:
A pioneer in increasing children’s financial literacy talks about thriving in a post-Madoff, post-subprime meltdown world.
Issues: Five financial development stages; essential skills children (of all ages) need to learn; observing your children’s money style and helping kids differentiate between wants and needs; connecting goals and savings; fostering an entrepreneurial spirit.

www.amazon.co.ukElizabeth Hartley Brewer, author of Making Friends
Topic:
A guide to understanding and nurturing your child’s friendships
Issues: Should you worry when your child’s imaginary friend sticks around past preschool? How do boys’ and girls’ friendships differ? What do kids really value in a friendship? What should you do if you don’t like one of your child’s friends?

www.amazon.co.ukJoseph Califano, author of How to Raise a Drug-Free Kid.
Topic:
The straight dope for parents
Issues: When and how to talk to your kids about drugs and alcohol; how to respond when your kid asks, “Did you do drugs?”; how to know when your child is most at risk; how to prepare your teen for the freedoms and perils of college

Could Giving Your Kids an Allowance Lead to Financial Ruin?

giving allowance makes kids irresponsible

Dear Mr. Dad: In today’s tough economy, I think it’s important to teach kids about the importance of saving money. The problem is that my husband and I don’t agree on how to do that. I think we should give the kids (10 and 13) an allowance, but he’s taking a harder line and says it’s important for them to earn their money. What’s your opinion?

A: Ah, allowances. Always a thorny subject. Before I jump in and start taking sides, you’re both absolutely right about one thing: People who develop good financial management habits as kids (including learning to become regular savers), are more likely to bring those habits with them into adulthood. And knowing how to manage one’s money—especially in uncertain times—is incredibly important. The big question, though, is how people get their money. Here’s where I agree with your husband. In my view, when you work hard for your money, you’re going to be careful how you spend it. When cash just shows up, it’s a lot easier to fritter away.
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Clean My Room? Sure. But Only if You Pay Me

Dear Mr. Dad: My wife and I have very different opinions about bribing our children. She wants to reward everything they do, from getting good grades at school to cleaning their rooms, with some sort of treat. This can be money, a special toy, or whatever. I say that the kids should learn that an achievement, like grades, should be its own reward. What do you think?

A: In last week’s column I raised the issue of paying kids do certain chores and I got a lot of emails—about half thought that was a good idea, half didn’t. I hate to say it, but there is no absolute right and wrong here. But I should have made a clearer distinction between bribing children and rewarding them. Although they may produce similar results, there’s a big difference.

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Daddy, why can’t you just get money out of one of those machines?

When my first child, who’s now 22, was less than a year old, I took her to an FAO Schwartz store in New York, thinking that she’d have a ball with all the toys and stuffies. But no matter what I pulled off the shelf, she was always far more interested in playing with the price tags than with the toy itself. Ten or 12 years later, I found it endlessly entertaining that she still had her obsession with price tags, saving up her clothing allowance to buy herself jeans  at $150/pair (I get mine at Costco for $12/pair and have never seen the point of paying much more than that). And in all the years in between, I can’t even count the number of times when she, presented with a “No, bunny, I don’t want to buy that right now,” would come back with, “Daddy, can’t you just get money from one of those machines?”
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Allowance for household chores? Hmmm….

Dear Mr. Dad: Our 12-year-old daughter says all her friends get paid for helping around the house, and she wants an allowance for doing chores too. This sounds crazy to my wife and me. Is it really a good idea?

A: I can see why you might scoff at the idea of paying your daughter for doing household chores. After all, when we were growing up, chores were a given, and our parents never would have paid us for doing simple things that contributed to the smooth running of the household. But that was also the era when we walked 12 miles to school every day, uphill both ways. In the snow. Barefoot. Without a cell phone.
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