Help your children learn the do's and don'ts of personal finance.

To my mother’s continuing distress, it’s rare that you’ll find more than $5 in my wallet. Not because I’m insolvent, but because in most cases, I simply don’t need cash.

My paycheck comes via direct deposit, and my phone allows me to use mobile deposit for any paper checks I receive. I can split a lunch bill with my friends using Venmo, and if I go to a craft fair, most vendors have Square card readers. Metered parking can be handled with an app, and now that I have Apple Pay, I don’t even need to carry a wallet with me to buy groceries or a cup of coffee.

While technology provides loads of convenience, there is one drawback from a parenting perspective. In my day-to-day life, I try to model good behavior for my toddler son. I say “please” and “thank you,” clean up my messes, exercise regularly and eat healthfully—all the big stuff. But with so many of our household transactions happening invisibly thanks to tech, demonstrating how to handle money has to be a more deliberate process.

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Thankfully, my son is only 2 (and not yet on the verge of making any major financial decisions), so I have some time. But in the spirit of being adequately prepared, I’ve researched advice on how to help kids manage money. And many children do have cash: A 2019 survey of 1,002 U.S. adults conducted by the Harris Poll on behalf of the American Institute of CPAs found that kids take in about $30 a week in allowance on average (around $1,500 in a given year). A 2017 T. Rowe Price survey found that most parents start giving their children an allowance around age 6.

That AICPA poll found that four out of five allowance-providing parents expect their children to earn it. On average, kids earn about $6.11 an hour for their work around the house.

Still, many experts suggest divorcing allowance from chores. Among them is world-renowned child care expert Benjamin Spock, whose “Dr. Spock’s Baby and Child Care” suggests that chores are how children learn to do their share around the house and that allowances should not be tied to them (although they may be allowed to earn extra money via extra chores).

Whatever your approach to the chores/no chores conundrum, the amount you choose to give may depend at least in part on your own financial circumstances, acknowledged a 2017 story in The Washington Post. “But experts do agree on a broad strategy: Give enough allowance so that your children can buy small things they want but will have to save up for bigger things—great practice for real life,” the paper advised.

That’s what Trisha Clark does with her youngest son, Ollie, 12. He doesn’t get “big” gifts unless he earns them or it’s a holiday, so that he understands it takes work to get what you want. Plus, she says, “We encourage him to save money and not spend it immediately on a small item, so he can see that waiting is sometimes worth saving for the longer term.”

Sesame Street offers a free online toolkit to help young children better understand finances. Lessons, downloadable materials and even a podcast series starring Elmo teach concepts of spending, sharing and saving (or as they frame it, “for me, for you, for later”).

Abby Holmes, mother of Harris, 7, and Eli, 3, says those three categories help her eldest son choose how to direct his cash. “Whenever Harris gets money, we have the three different bins, and he splits the money between them. We let him decide the ratio,” she says.

Geni Randle-Miller says daughter Lydia, 8, loves to read the Moneybunnies series (“Save It!” “Earn It!” and “Spend It!”) to her 22-month-old brother, Dylan. Randle-Miller says the books serve two purposes: “storytelling, and providing the easiest ways to explain how to earn, save or spend money. The illustrations include carrot spreadsheets. It’s adorable.”

Clark says her family also broaches the long term when talking about finance. “We talk about what it takes to be a good employee, work skills, options for his [Ollie’s] career ideas. He is already changing his dreams to be a YouTuber to being an artist.”

And as kids get older, you can give them more responsibility, moving from jars of cash to bank accounts, says financial guru Dave Ramsey, who suggests that by the time kids hit their teenage years, they’re ready for the responsibility of banking. “This takes money management to the next level, and will [hopefully] prepare them for managing a much heftier account when they get older,” he says in a blog post with tips to help young people of all ages develop a healthy relationship with money.

Jennifer Wray is a freelance writer, mother and fan of all things pop culture.

This story is from the Spring 2020 issue of Columbus Parent.