By CFPB and FDIC
Giving children an allowance is a topic many parents discuss. Even within families, parents can disagree about whether it’s a good idea.
Research doesn’t conclusively prove whether or not having an allowance helps children achieve better financial well-being as adults. However, research does suggest how to make an allowance work well for your children, if you do decide to give one.
Don’t just hand over the money and leave it at that. Make it part of your conversations. Talk about what the family budget still covers. For example, you can clarify that the child’s meals with the family, school clothes, and school supplies are the family’s responsibility. The child’s own expenses, like clothes he wants to buy or apps she wants to add, should come from the allowance.
If you give the allowance weekly, check in each week and ask about what the child decided to do with the money. Did she save any of it for a future goal? What did he learn about spending, saving, or planning ahead? Does she want to make changes to how she spends money next time?
Some families decide to pay children for certain chores. If this sounds like your family, you can have similar conversations about what your child earned.
Whether to give an allowance at all is a choice each family should make. To make the most of an allowance if you choose to give one, commit to giving your child some of your own time and guidance along with it.
By Ashley Gordon, CFPB
Watch Leah’s story.
Just a year away from graduating with $23,000 in student loans, Leah didn’t know how she was going to make her payments. They were a constant source of stress in her life; she would lie awake at night thinking about how she was going to pay off her student debt. She was worried about her future.
We understand that fear – it’s why we built our Paying for College tool. It helps students and recent graduates inform themselves about the true cost of college and the repayment options available after graduation.
Leah learned about the Income Based Repayment option, which helped to significantly lower her monthly payments. “It’s a lot less stressful now,” she says; “It feels amazing… My husband and I don’t feel like we’re living paycheck to paycheck. I wasn’t informed when I was taking out my student loans of the reality of after college. And now students have the CFPB website to know in advance and be informed of what to expect when they graduate. I took charge of my student loan debt. Now other students can take charge of theirs thanks to the CFPB.”
Do you have a story like Leah’s? Do you want to find resources for students and graduates? Or are you interested in what other people are saying about their experiences with financial products and services? Check out Everyone has a story.
You know your kids are online, so talk to them about the risks and how their activity can impact them later:
From the State Department:
Going back to school? Ever thought about traveling abroad? Check out our Google+ Hangout to learn more!
Study abroad connects American high school students with future leaders around the world, enabling them to collaborate on today’s global challenges such as human rights, community development, workforce development, climate change, and global health. Scholarship opportunities are open to all American high school students who meet program eligibility criteria.
Image description: Starting school but have questions about student aid? Tweet your questions with the hashtag #AskFAFSA to get an answer.