Experts recommend a cash allowance for children, rather than just buying them whatever they want or allowing use of a credit card.
While your kids may be growing up in a world that is very different from when you were a youngster, there is one financial trend that continues to hang on: the allowance.
The amount of kids who get an allowance varies depending on what data you consider. Market research firm Yankelovich Partners found that about 58 percent of American children receive a regular allowance, although other studies put that number closer to one-third of kids.
If you want your kids to learn how to use money responsibly, experts still recommend the weekly allowance. Instead of just buying your child whatever he or she wants or allowing them to charge purchases on your credit card, a cash allowance gives them the opportunity to develop their money management skills.
But what about online purchases, like downloadable music, that require a credit card or debit card for purchase? How can a kid with a cash allowance money buy a song off iTunes if that’s what they want to spend their money on?Rather than just handing over your plastic or making your son or daughter an authorized user on your credit card account, experts say an allowance can still come into play. In such cases, kids can pay their parents in cash for the purchase, which the adult may then put on a credit card.
Experts say that cash allowances are best for kids, since plastic tends to not seem real to young consumers. They don’t see the differences between a credit card, prepaid card and a debit card.
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