It makes financial sense to wait to collect your Social Security benefits until you hit full retirement age: 66 if you were born between 1943 and 1954 and as old as 67 if you were born after 1959. Your Social Security benefits will shrink if you begin collecting them before you hit full retirement age. According to the Social Security Administration, if you are the main wage earner and begin taking payments at 62 — the earliest age that you can begin collecting — you will receive just 75 percent of the benefit that you’ll receive if you wait until full retirement age. This can add up. However, there are times when retiring early — and collecting those monthly Social Security checks before you hit full retirement age — is actually the right decision. I cannot work: Maybe you’d like to continue working until full retirement age. Unfortunately, events have conspired against you. Maybe your health is bad, and you can no longer handle the strain of working. Maybe you lost your job, and you have not been able to find replacement work. In such cases, it might make sense to begin drawing your Social Security benefits before you reach your full retirement age. Taking a smaller Social Security benefit each month is a better alternative than is running up credit card debt or facing the possibility of losing your home to foreclosure. My health is bad: This a rough estimate, but if you expect to live past 78, it makes more sense to wait until you hit Social Security full retirement age. If you do not think you’ll live to 78, it makes sense to take your Social Security payments as early as possible. Of course, you cannot predict how long you’ll live. However, if you are in poor health already, or are suffering from a potentially life-threatening disease, your odds of living past 78 are lower. It might be time to consider taking your Social Security benefits earlier. I am married and my spouse is ready to start collecting: Even if you have not reached full retirement age, it is considered smart for married couples to begin taking their Social Security benefits at the same time. If your spouse passes away before you, you can choose either to receive your Social Security benefits or your spouse’s, whichever is higher. Your spouse has passed away: If you are a surviving spouse, you can either claim your own Social Security benefits or those awarded to your deceased partner. You’ll obviously take the payment that is higher. If you take your spouse’s benefits, though, before you reach full retirement age, these benefits will be reduced permanently. It might not make financial sense, though, to wait until you reach retirement age. For instance, if you’ll struggle to pay your household bills without the benefits of your deceased spouse, you should begin taking your benefits as soon as possible.

Special Situations to Consider Before Starting Social Security

View Resource Special Situations to Consider Before Starting Social Security
You are attached to your home. That is natural: Your children grew up in this home. You spent long hours with your spouse in this home. You’ve celebrated holidays, anniversaries and birthdays in this residence. Giving it up is no easy task. Also, then there’s the physical challenge of moving. Moving from one residence to another can be a grueling job, both mentally and physically. However, there are times when downsizing to a smaller home makes economic sense. A smaller home can mean less maintenance and lower costs. Moreover, during your retirement years, both are important if you want to live a comfortable, stress-free life. Moving to a smaller home When does it make sense to move to a smaller home? When maintaining your current home is both too physically and financially demanding. Consider the physical side first. You once needed a lot of living space in your home. You had children living with you, and they ate up a great deal of your home’s square footage. However, now it is just you and your spouse. You have too much space, space that you now rarely if ever use. Unfortunately, that space still needs upkeep. You still need to mow that large backyard that you rarely use and stain that oversize outdoor deck that mostly sits empty. You and your spouse may rarely travel to the second floor of your home, but that does not mean that the carpets up there don’t need vacuuming or that the furniture does not need to be dusted. The simple truth: It is easier to care for a smaller home. You might even consider moving into a seniors community, condominium unit or apartment. Such options allow you to forget about yard work, so that you’ll no longer have to worry about how tall the grass has grown or how deep the afternoon snowfall was. The financial advantages of moving to a smaller home are important, too. Smaller residences often come with lower property taxes or insurance costs. This can be important as you move into your retirement years. Remember, your monthly income will fall once you leave your job. You can better protect the monthly income you do receive by reducing the amount of money you spend on taxes and homeowners insurance each year. Reducing expenses As you debate whether it is time to move into a smaller home, you can also take steps to downsize other of your regular expenses. Again, every dollar that you do not spend leading up to or during your retirement is an important one. For instance, once you hit retirement age, it is time to take a closer look at your insurance coverage. While you may need to add supplemental health insurance as a boost to Medicare coverage, you might be able to cut out other insurance costs. The odds are you’ll no longer need as much life insurance as you grow older. If you no longer need a second car because you do not commute to work, you’ll also be able to lower the amount of money you pay each month for auto insurance. Then there’s phone service. Many of us hold onto cell phone service plans that simply cost too much. Consider searching for a cheaper service. You might not need all of the monthly minutes for which you are now paying. Consider, too, whether you still need a land phone line. Many people have dropped their land lines entirely, opting instead to rely on less expensive cellular plans for their phone service. Reverse mortgages If you choose not to move to a new home, you might consider a reverse mortgage as another potential income stream. A reverse mortgage allows homeowners of retirement age to access a portion of their residence’s equity that they can use to pay for bills and living expenses. Retirees can do this in a number of ways. They can choose to receive their equity payment in a lump sum, in the form of monthly payments, or they can take the funds as a revolving line of credit. Retirees do not have to make payments to the lender that provides them with a reverse mortgage. Instead, they typically repay the home when they die or sell their residence. Homeowners, though, need to be careful with a reverse mortgage. If they die without having first repaid the loan — typically through a house sale — their heirs will be responsible for selling their home and repaying the loan, something that can add stress to their lives.

Down-Size Your Home, Right-Size Your Life

View Resource Down-Size Your Home, Right-Size Your Life
The secret to a happy retirement? There are probably many. However, not having to worry if you’ll run out of money is certainly near the top of the list. The problem is, people are living longer today. It is not unusual for people to live well into their late 80s. That is a good thing, except when it comes to retirement savings. Living longer means you’ll need far more dollars for your retirement years. The secret to stretching those dollars is proper management of the money you’ve saved for retirement. The wiser the financial choices you make, the more likely it is that you will not run out of money during your retirement years. The good news? Managing your retirement funds does not have to be complicated. You can either hire a financial advisor to take on this role or you can do it yourself. Going with a pro There are plenty of financial planners who can help you manage your retirement funds. These financial pros can provide you with suggestions on how much money you should withdraw from your savings each year. They can also provide guidance on which investments you should first make your withdrawals from. A financial planner can also spot signs of trouble with your investment portfolio. For instance, you might have a portfolio that’s weighted too heavily toward risky stocks. Alternatively, you might have one that doesn’t have enough risk. Both can cost you a significant amount of dollars during your retirement years. A portfolio weighted too much towards stocks could eat away your savings should those stocks falter. A portfolio that relies too heavily on safer bonds could shut you out of the potentially bigger gains that stocks can generate. The key to having someone else manage your retirement funds is to find the right professional for the job. This means that you’ll have to interview several financial planners or advisors before selecting one to watch over your funds. First, make sure to work with a Certified Financial Planner. Such planners must take regular continuing education courses to maintain their certifications. This means that they are more informed about the latest investment trends, strategies and vehicles. Secondly, only work with a financial planner who is willing to provide you with references of current customers. You want to consult with these references to make sure that they have been satisfied with a particular planner’s advice, service and responsiveness. Finally, make sure that you only work with a financial planner with whom you are comfortable. You will be sharing personal financial information with this professional. You want to be able to trust them. Ideally, you should like them, too. Work with a planner who listens to you, takes your individual needs into account and gives you a say in investment decisions. There should be no “one-size-fits-all” advice. Going it alone You also have the choice of going it alone when it comes to managing your retirement funds. If you choose this route, you’ll need to commit to staying up-to-date on the latest financial news and be willing to conduct regular reviews of your investment portfolio. That latter point is important: Too many retirees who manage their retirement funds review their investment portfolio on a frequent basis. This is a mistake. As you age, your investment needs change. It may make sense to have more risk in your portfolio in the early years of your retirement, especially if you expect to live many years after leaving the workforce. However, as age, you might need to reduce some of that risk. If you do not review your investment portfolio and make the necessary changes, on a regular basis, you could end up costing yourself financially in the latter years of your retirement. Many retirees who manage their retirement portfolio rely on the bucket approach. Under this method, you divvy your investments into several buckets. Those buckets with the least amount of risk, investments that typically include certificates of deposit, money market accounts and short-term annuities, are the ones designed to fund the first five years of your retirement. The bucket of investments that funds your sixth through 10th years of retirement includes investments with a bit more risk, such as longer-term certificates of deposits and short-term treasury notes. The risk gradually increases with the buckets designed for years 11 through 15, 15 through 20 and 21 and beyond. The key, though, is to move your savings from those riskier buckets to the safer buckets as you move through retirement. For instance, in year six of your retirement, the money you previously had in bucket two, with a bit more risk, goes down to bucket 1. You then start withdrawing from this bucket until you move into your 11th year of retirement. At this point, you move your investments down another level of buckets.

Managing Your Retirement Funds

View Resource Managing Your Retirement Funds
You’ve worked hard all your life. You do not want to enter retirement worrying about how you are going to pay for medical costs, insurance, groceries and your other bills. The key to living a comfortable and stress-free retirement is to draft a realistic budget and to cut out unnecessary expenses. If you do this, you’ll greatly increase the odds that your retirement years will truly be your “golden” years. Reduce your spending Financial experts say that you’ll need 70 percent to 80 percent of your pre-retirement income to live happily during your retirement years. However, that is just a general statement. Only you can determine exactly how much money you’ll need during retirement. That is why you have to set your budget. For instance, you’ll need more money if you plan to spend your retirement years traveling the globe or booking cruises. You’ll need less if your retirement plans involve spending time with your grandchildren, playing golf with your friends or fishing on a nearby river. Your health plays a role in your retirement budget, too. If you are already suffering serious health conditions, the odds are high that your medical costs will be significant during your retirement years. No matter what kind of retirement you’d like to live, though, you’ll have an easier time reaching your goals if you reduce some of your expenses. Remember, the lower your expenses, the more dollars you’ll have to do what you want during your retirement years. First, consider your home. You might no longer need all that indoor and outdoor space. Maintaining a large home takes much work. Larger homes also often come with higher property taxes and homeowners insurance bills. Consider downsizing to a smaller home, one that comes with lower property taxes, as a way to cut your monthly living expenses. You might also consider moving to a less expensive community in which to live. With your children grown and out of the house, top-notch schools and busy parks might no longer be a consideration. This frees you up to consider moving to a part of town in which consumer goods and property taxes are both lower. It is not always easy to leave the community in which you’ve spent decades, but sometimes moving to a cheaper town makes good economic sense. Look at your existing insurance policies, too, as a potential source for savings. Now that you’ve hit retirement age, you might no longer need to invest in life or disability insurance. You might not have children that depend on you financially, and your spouse might be able to survive on his or her own financially without life insurance payments. Ditching those insurance payments can add up to significant savings. Speaking of children, be wary of providing them too much financial assistance as you age. Yes, you want your children to be happy. You do not want them to struggle to pay their bills or provide for their families. However, if you spend too much money supporting your adult children, you could accidentally eat away at your savings, leaving you and your spouse in a financial bind. As you hit retirement age, your priority is to make sure that you and your spouse are financially secure. Working longer can pay off You can stretch your retirement savings, too, by working longer, either on a part- or full-time basis. This extra income that you earn during your retirement years can help you cover your basic living expenses, allowing you to leave more of your savings untouched. It is important, too, to understand the possible drawbacks of collecting Social Security benefits too early. You can begin collecting your monthly Social Security payments at the age of 62. When you do this, though, your payments will be reduced. In fact, your payments will be lower if you begin taking them before your full retirement age. Your full retirement age depends on your year of birth but will fall somewhere between the ages of 66 or 67. There are times when it makes sense to begin collecting your benefits as early as possible. However, most financial experts agree that it is better if you are relatively healthy and expect to live past 78 to wait until at least 66 or 67 to begin collecting your monthly Social Security payments.

Stretch Your Retirement Budget

View Resource Stretch Your Retirement Budget
When you are moving out on your own, the first place you live will probably end up being an apartment. They are generally inexpensive, readily available, small, and are often densely concentrated in the places where young people most like to live. Starting the process may seem nerve-wracking at first, especially if you do not know what to expect. A little bit of planning and preparation can go a long way in helping you get into the best apartment for your needs. Setting a budget The rule of thumb is that your rent should be no more than 30 percent of your income, ideally more like 20 to 25 percent. Perhaps more important than the percentage is whether you will have enough money leftover after paying your rent to cover your other obligations. Consider your costs for transportation, food, insurance, debt payments, and other necessities and calculate how much you can afford to spend on an apartment. If your budget is not enough for an apartment in your area, consider finding one or more roommates to divide the cost. However, keep in mind the complications they bring, especially as you figure out how to divide chore responsibilities, handle joint costs, and share the space with each of your guests. Additional costs of renting As you are looking for apartments within your budget, remember some additional costs that may or may not be included in the rent. The big one is utilities, including electricity, heat, water, and cable. If your rent does not cover these, you may be able to call the utility company with the apartment address to get an estimate of what the recent bill amounts have been for that unit. Consider other added costs like a garage or parking space and fees for having a pet in your apartment. On the flip side though, make sure also to factor in perks, like a fitness center and pool, which may allow you to skip paying for a separate gym membership. Signing a lease You’ll need to go through several steps before you sign a lease. The application will include an employment check, calling your personal references, and checking your credit history. If you do not have good credit history or solid employment, the landlord may require you to have a guarantor or co-signer on the lease with you. Your parents are the best candidates for this role. When you sign a lease, be ready to put down some money. This will include a security deposit, the first month’s rent, and sometimes the last month’s rent as well. Find out what you need to do to get your security deposit back in full when you move out. The last major thing to consider is the length of the lease. You are committing to live there for the entire lease term, and it is worth finding out what the penalties are for breaking the lease if you need to move. Some apartments will let you sublet to another tenant to finish out your lease, which can be helpful if you are not confident you’ll stay at your current job.

Renting Your First Apartment

View Resource Renting Your First Apartment
When you get married, you tie the knot in more ways than one. In addition to committing to one another, you are also committing to a life of managing your money together. Regardless of whether you plan to manage your finances separately or jointly, you need to create a game plan before your wedding day. Reviewing accounts and debts It is not uncommon for couples to come together and realize that one has a lot more debt than the other. Whether it is credit card debt, student loans or a mortgage, you’ll need to talk about it. Start by sitting down together and taking a comprehensive look at what each of you owes. If you feel tension because one of you has more debt than the other, discuss what you want to do about it. For example, some couples decide to manage their money separately, so each one continues paying pre-marriage debts out of his or her paychecks. You’ll also want to take a look at each of your credit reports because your credit history will affect your ability to qualify for joint accounts, especially a mortgage. If your spouse has a lower score, lenders will use that on a joint application. The sooner you know about credit problems, the sooner you can start working together to improve your credit and build a strong financial future. Setting financial goals Once you know where you stand, talk about where you want to go. Do you want to focus on paying off debt? Saving money for a down payment on a home? Catching up on retirement savings? Going on lots of vacations while you are still young? In the areas where your goals differ, talk through your reasoning with each other until you are on the same page and in agreement on your priorities as a couple. Deciding between joint or separate accounts It is just as common for couples to maintain some separate accounts as it is to join their finances completely, so you should feel free to decide what makes the most sense for your situation and relationship. Maintaining separate accounts can be wise if one of you has child support or alimony responsibilities or if one of you has gotten a large inheritance. However, joint accounts are helpful for managing shared expenses. If you both have both joint and separate accounts, decide where each other’s money initially gets deposited. Some couples deposit their paychecks into a joint account and then transfer allowances into separate accounts for their discretionary spending needs. Others choose to deposit their pay into separate accounts, with each transferring a specific amount each month into a joint account to cover shared expenses. Agreeing on money management rules The last step is to agree on your rules going forward. Talk about who will be in charge of paying the bills, how you’ll manage conflicts over money, and what types of financial decisions you need to discuss together. For example, some couples set a specific price point above which they have to agree on a purchase before making it. Studies show that a great deal of marital discord occurs because of disagreements over money. In that regard, it is not as important the specific choices that you make, rather that you are in agreement on those decisions.

Getting Married

View Resource Getting Married
After they spent at least 18 years taking care of you at the beginning of your life, there’s a good chance you’ll end up helping take care of your parents at the end of their lives. They may need a little bit of help keeping track of when bills are due, or in planning how to tap into their retirement accounts. Towards the end of their life, they might need you to take full control over the management of their personal finances. Even if your parents have not yet reached the point when they need help, it is never too early to start having conversations about their financial fitness as they head into retirement. That way, you have plenty of time to plan how you will take care of your parents as they get older. Costs of elder care If your parents were on an especially tight budget during their working lives and in the early years of their retirement, they might not have the funds available to handle their long-term care needs financially. That might be left to you to fund, and it can be expensive. For example, receiving long-term care in a nursing home or assisted-living facility usually costs between $3,000 and $5,000 per month. Those costs will vary depending on the type of facility and where you live. If the cost of paying someone to care for your parents seems too high, the alternative is for you to take on the task yourself. If you have space in your home, invite your parents to move in with you so you can keep a closer eye on them and care for them as they age. Another option is for you to move in with them or near them so you can provide care while minimizing expenses. The other major expense to consider is health care. Although Medicare provides for their basic health expenses, they will need to be ready to pay for additional costs. Supplemental insurance is one option, or if they have substantial savings, they can self-insure and be ready to pay for costs Medicare does not cover out of their savings. Financial resources for elder care Ideally, your parents will have saved enough money to pay for their eldercare. Between Social Security checks, their pensions, and withdrawals from other types of retirement accounts, some elderly parents have plenty of money to cover their expenses. If your parents do not have enough income from typical sources of retirement savings, another option is for them to sell their home when they need to transition into an assisted living or nursing home. The income from the sale can play a large part in taking care of their financial needs. If they are not ready to move yet, a reverse mortgage is another alternative. It is similar to a home equity line of credit, but they will not need to make payments on it until they move out of the home. Medicaid provides another way to pay for basic nursing home costs. Your parents will need to qualify based on their means, and they will have to spend down nearly all of their assets before they can qualify. They cannot give away assets to you or others to qualify because the government looks back five years in financial records. If your parents are still working and healthy, you may want to consider long-term care insurance. This is difficult to obtain, but if they can qualify early and start making payments, it will cover the cost of long-term care when they are unable to care for themselves. Managing your parents finances Now is the time to start talking with your parents about where they stand financially and how they want their money managed. It is a sensitive topic, but your conversations now will allow you to understand what their needs may be in the future. In addition, in the event that you need to manage their finances for them, you will be more confident that you are following through with their wishes. As far as the legal side goes, have them create a power of attorney for you as soon as you know you will be in charge of managing their finances. This is a simple document that needs to be signed and notarized, and it allows you to stand in for them in a legal sense when they are no longer able. Getting this done now helps you avoid lengthy court proceedings if something happens to them before they designate a power of attorney.

Taking Care of Elderly Parents

View Resource Taking Care of Elderly Parents
Even if you are a smart spender, your kids will not necessarily pick up this habit unless you make it a point to teach them. Plenty of kids from frugal households get out on their own and rack up tons of unnecessary debt because they do not understand the principles behind smart spending. Therefore, from an early age, start training your kids in the techniques they’ll need to spend their money wisely and avoid debt whenever possible. Saving before you buy Kids need to understand that they cannot buy something unless they have already saved the money they need for it. When they ask for items that they cannot afford to purchase just yet, it is the perfect opportunity to help them develop a savings plan to make the purchase happen. Sit down with your son or daughter to discuss how much the item costs, how much they want to save for it each week, and how many weeks it will take to have enough money. Help your child walk through the process of saving, at least the first time or two. Younger kids do best with tangible methods, like putting coins or bills in a jar with a picture of the item taped to it. Older kids saving for a bigger purchase may prefer to deposit money into a savings account each week and work toward the purchase that way. Learning to shop Another principle of smart spending your kids need to learn is purchasing items at the right price. It may not be intuitive for them that the most expensive items are not actually the best, or that you do not always want the least expensive items. You’ll also need to get across the idea that items on sale are not necessarily “saving” them any money, just giving them a lower price to consider. Start at the grocery store on your household shopping trips. Let your kids look over the weekly advertisement with you to pick out the items to put on your list. When you need items that aren’t on sale, have them help you find the best deal among the available brands when you get to the aisle. Setting a good example Whether you like it or not, your kids are watching you and being shaped by your actions. Therefore, when you are trying to teach them smart spending habits, you also need to be a smart spender yourself. Don’t be afraid to talk about your budget, especially when you are not buying things your kids want because you are saving money for more important priorities. It is also helpful, especially when your kids are younger, to make purchases in cash instead of using credit cards or debit cards. This allows them to see the exchange of money happening, so they more clearly link the fact that you need to have money to be able to buy things. As your kids grow into teens, you can start talking about credit cards and how to use them wisely for emergencies or purchases you’ll pay for in full when the bill comes.

Smart Spending

View Resource Smart Spending
The person on the other end of the phone has exciting news: You’ve won first place in the sweepstakes. A new car will soon be yours. The catch? To claim your prize, you have to send a small payment to cover its delivery, maybe $100 or $200. Be careful. The non-existent sweepstake is one of the most common telephone scams. Once you send in your prize-recovery fee, your money disappears. And that new car you’ve won? It never shows up. In this age of the Internet, it’s easy to forget that con artists have been using the phone for decades to scam victims out of their money. And if you don’t recognize the warning signs of a phone scam, you, too, can fall prey. Here are some of the more common phone scams and how to recognize them. For the ‘sweepstakes scam’ mentioned above, the red flag to watch for is a request for a fee to claim your prize. No legitimate sweepstakes or lottery will ask you to send money upfront to claim the prize. If the person on the other end of the phone asks for a credit card number to verify your identity, immediately hang up. That’s another sure sign of the sweepstakes phone scam. The fake check: Are you advertising an item for sale on Craigslist? Be wary of the fake check phone scam. In this scam, a crook calls to buy your item. The catch? This scammer wants to write you a check for more than the amount of the item. Say you’re selling a patio furniture set for $200. The scammer will send you a check for $300, requesting that you deposit the check in your bank and wire the extra $100 back to the scammer. What happens next? Three days later your bank calls: That $300 check is a fake. The lesson here? Never wire money to someone you don’t know, for whatever reason. Phishing: We all know of phishing scams in the online world. But it can happen by phone, too. A crook will call you claiming to be a representative of your bank, credit-card company or phone company. The caller will ask for a piece of important information, maybe your bank account number or perhaps a PIN. Don’t provide this information. The scammer will use it to empty your bank accounts or run up fraudulent purchases with your credit card. The rule here is a simple one: Never provide account numbers or PINs to someone who calls you on the phone. Your real bank or credit-card company will never ask for this information if they call you; they already have it on file. Expiring warranty: The expiring warranty is a phone scam that doesn’t even require a live caller on the other end of your phone. Instead, an automated message will click on when you answer the phone. The message will tell you that the warranty on your car is about to expire. After the recording ends — if you haven’t hung up — a live operator comes on the line and requests a payment for a new warranty. If you pay? You’ll never receive any paperwork, and you’ll never receive a payout should you damage your car. Avoid falling for this phone scam by demanding that any company selling you a warranty send you the paperwork explaining the policies before you make any payments. Most times, the voice on the other end of the line will disappear, and you’ll receive no documents in the mail. To protect yourself from phone scams, follow certain rules: Never feel pressured to make a quick decision. Always ask for paperwork or documentation before sending money. Never give out your credit card, bank account or Social Security numbers to a telemarketer who has called you. And never pay for what is being touted as a “gift.” For further protection, sign up for the National Do Not Call Registry. Registering should prevent most unwanted calls from reaching you. And if you think that you’ve fallen for a scam, even if you’ve already sent money, contact the Federal Trade Commission at 877-FTC-HELP.

Common Phone Scams

View Resource Common Phone Scams
As if you did not have enough bills to pay in your life, your kids are likely to reach a point when they start asking for an allowance. Although you may think that you are already spending plenty of money on your kids, it can be very helpful to give them an allowance as well. After all, if kids never have money of their own, they’ll never have the opportunity for hands-on learning of how to manage it. Teaching your children about money management should be an important part of any decisions you make about giving them an allowance. When to start giving an allowance Decisions as to when to begin to start giving your child an allowance may vary depending on their maturity level, but, you should not even think about starting allowances until they are in elementary school. At that point, kids understand what money is, how much it is worth, and what they can do with it. Some kids may not be interested in money yet, in which case, it’s fine to wait until later in elementary school, or even once they start middle school. If you have more than one child, consider how the allowance will affect the siblings. You may want to wait longer to start giving the oldest child an allowance so you can start your first two kids at the same time. Alternately, you may set a family rule that all children start receiving an allowance at a specific age, sort of as a rite of passage. Determining the appropriate allowance amount You may have heard the rule of thumb that kids should get $1 per week per year of age. However, in many cases, this is too much money. The right amount depends a little bit on your budget, but mostly on what you expect your kids to be doing with their allowance money. They should have enough for some little luxuries, but not so much that they do not have to save for bigger purchases. If your kids do need to be purchasing all of their non-necessities with allowance money, they’ll need more than if you buy the occasional toy or candy bar for them while you are out. In addition, if you expect them to save a portion of their allowance for future, high-ticket expenditures, you might give them more than if they just make impulse purchases. Helping your children manage their allowance Before starting an allowance, set ground rules about how the allowance will work. Tell your child how much he or she will get and how often, and stick to that schedule to develop consistency. Clearly outline what your child should be doing with the money, and include requirements that you both agree to, such as giving some of it to charitable causes or saving some for future purposes. Besides that, though, give your child freedom to do what they want with the money, which will help them learn money management skills for later in life.

Allowances and Children

View Resource Allowances and Children