Remember to help them set aside a portion of the allowance for savings and charity. Talk with your child about people and organizations they would like to help and what percentage they would like to give each month. As your child becomes a teen, how your teen spends the rest of their allowance should be up to them. Don’t force them to buy necessities, such as clothes and school supplies with their portion of their allowance. If your child chooses to do so, that’s fine. However, allowing him to spend his allowance on whatever he chooses will teach him to make good financial decisions. When he makes mistakes, explain what they were and how he can avoid them.

Teens will need a clothing allowance above and beyond their regular allowance. Help your teenager to set up a clothing budget and encourage him to stick to it. However, if he chooses to spend $80 on a pair of blue jeans that he’s been wanting for ages, don’t discourage him. He will learn that purchasing a big ticket item will make it necessary to be thrifty for other clothing purchases. Whatever you do, don’t hand your child or teenager extra cash when their allowance is gone. This will promote good spending habits and financial responsibility now and in the future.

As your children get older, show them some of the bills that you are required to pay, such as bills for electricity and cable. Tell them that planning ahead for expenses is a wise thing to do. Talk to them about hard, unexpected financial times. Illness and being laid off are a few examples to speak to them about. Share with them that when someone has saved for a rainy day, they have a cushion to help them through these difficult financial circumstances.

Don’t forget to teach your children about sales tax and how to calculate how much tax is added to purchases. Once they have a basic understanding of savings and a savings account, you can introduce them to the concept of savings bonds, pointing out how interest is compounded. Older teens should be at least introduced to the concepts of the stock market, credit cards, mortgages, car loans, insurance, student loans, ect. The best way to prevent a college graduate from graduating with a pile of debt is to start teaching them early. Learning about financial responsibility can’t start when they are already in debt; it should start from childhood.

Teaching your children to save and give a portion is a win-win situation. It is one that will impact the rest of their lives in a positive way. What a wonderful gift to give your children.

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