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Long before they even think about their first job, kids get a chance to spend and save money thanks to mom and dad.
But when it comes to allowance, finance expert Ron Lieber argues most parents are doing it wrong.
“This is no big surprise, given how little time parents think about their kids’ relationship with money,” Lieber wrote in a recent article for Slate.com. “The greatest act of protection we can commit is to talk to our children about money a lot more often.”
Here’s his advice about allowance:
- Start early — The preschool years are a good time to begin.
- Give a dollar per week per your child’s year of life — So $5 per week for a 5-year-old, for example. That’s a good start, but remember that allowance “should eventually go up — way up, if you can afford it,” Lieber writes.
- Don’t peg allowance to chores — If you do that, your kids will stop doing housework when they have enough money.
TODAY’s Natalie Morales worried her 10-year-old son Josh would watch the segment and ask her for a raise. (She currently gives him $7 per week. “And he’s 23,” Lauer joked.)
“I’m a cheapskate, I guess I have to raise it a little,” Morales said, adding that she wasn’t sure about the advice to not tie allowance to chores. “I believe they have to do something to get the money. They have to be held accountable.”
“Well, if that’s the case, a couple of my kids would be in deep trouble,” Lauer said.