The common mistakes parents make when giving kids an allowance

MILWAUKEE -- Are you sending your kids the right message about money? Allowances can be a great tool for parents -- if they're done right. Local financial professional, Nick Foulks with Drake and Associates, joins Real Milwaukee with the five mistakes parents make when giving kids an allowance.

Starting too late
• kids should get an allowance when they can distinguish the difference between wants and needs and when they can count. This usually happens around preschool or kindergarten age.
• If you start early, kids will develop an appreciation for money - both saving it and using it. That appreciation has a much better chance of sticking with them throughout their lives.

Focusing Too Much on the Amount | Visual = 3 money jars or piggy bank with 3 slots Nick will bring in
• On average, kids in the U.S. get $67.80 per month and one in four get $100 or more per month
• Whatever you choose to give your kids - the amount matters less than the conversation you`re having with them about money.
• Start with a dollar a week or so for each year of the child`s age and divide the money among three containers: save, spend, and give. This is like a mini-version of an adult budget. You`re teaching them the basic foundation of finances.

Tying all the money to chores | Visual = Chore Chart Nick will bring in
• Most parents have their kids do chores for their allowance.
• But some parents feel that kids should take on chores and household responsibilities because they are part of the family and everyone should be contributing.
• You can pay for chores that are outside of their regular weekly or daily jobs. Just make sure they equating 'effort or work' with 'money'. (

Giving money with no strings attached
• Agree on items you expect your kids to pay for. When they`re in middle school, have them pay for their own snacks at school or new video games.
• As they get older, they can cover larger purchases. Let your teen manage a lump sum you`ve budgeted for back-to-school clothes, for example.

Bailing them out
• If kids make mistakes, let them experience the consequences. Don`t bail them out.
• If they get their allowance on Friday, but discover something they want on Wednesday - have them wait.
• When their money`s gone, it`s gone.

Q. What if they ask for a raise?
• That`s a great time to teach them about negotiating. When is the last time they were given a raise? Are they doing something extra to deserve a raise? What amount of the raise will they save and what will they spend?
• The most important thing to remember is to not just hand over money without a valuable lesson to go along with it.