When Can Kids Handle Own Money?

Children seem so worldly at young ages today, New York City television station WNBC said, you may think you need to start them on an allowance in preschool.

Financial professionals say that's not only unnecessary, it's probably a mistake.

Toddlers and preschoolers are still figuring out the mechanics of mobility and speech. They're not ready for the responsibility of money, but they do ask for things.

"Right now, as far as money, I teach her she can't always get what she wants," said Antoinette Morgan about her daughter.

Janet Bodnar is the executive editor of Kiplinger's Personal Finance magazine. She said parents first need to learn the power of "no" when young kids get the "gimmes."

"I think it's very important that parents set limits at an early age that children are not going to get everything that they see on TV," Bodnar said. "If you start that with small things that they see on TV, it's carryover as they start asking for bigger things."

By the time youngsters enter first or second grade, Bodner said, they may be ready for an allowance, but she cautioned that parents should make sure the amount is appropriate.

"I use as a guideline, a base amount, a weekly amount equal to about half a child's age," Bodnar said. "I find parents are comfortable with that amount; they don't feel it's too much or too little, at least as a base."

Not all parents buy into that theory.

Christian Ruiz, 6, is going into the first grade and his parents say he doesn't need an allowance yet.

"At this age, all they should be worried about is having their fun and school, not money right now," said George Ruiz, Christian's father, said.

When parents do decide their children are ready for a little financial responsibility, Bodnar advises earmarking the type of spending allowed.

Giving your children a cash allowance is one thing, but what about the use of credit cards?

According to Bodnar, giving a teenager a credit card is unnecessary and asking for trouble. While the children may be tight-fisted with their own money, they don't see their parents' money or plastic in the same light.

Bodnar said even college students don't need credit cards, as there are safer options that will teach them better money-management skills.

"If they have their own checking account with a debit card attached, that gives them the convenience of plastic and they don't have to carry cash around," Bodnar said. "If they overdraw the account, they're immediately going to know it with a bounced check charge."

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