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February, 2012 
As children, most of us received an allowance for simple and obvious reasons. We were taught responsibility. We were taught that work often comes with a reward. And lastly, we were given the chance to manage our money. So now that we're parents and we want to teach our kids how to manage their money with an allowance, what's changed? And what's the best way to teach these lessons to our children? expand/collapse- When to start.
According to Dave Ramsey, you can start as early as pre-school and as late as the third grade. North Oak branch manager Laura Jones believes the age to start should be based on the child, "That depends on what you feel is appropriate for their age, how much they will be financially responsible for and what you can afford yourself."
And it's important for your kiddos to have the freedom to make their own mistakes. A wasteful ten dollar decision today could prevent them from making a ten thousand dollar mistake as an adult. Just make sure you're there when your child makes the inevitable money misstep. That way, each poor decision will come with a valuable lesson.
- How much to give.
The amount should be a discussion with your child. After all, if they don't think the work is worth the money, you've got a new set of problems on your hands. And the lesson of "with work comes reward" can only be absorbed if the reward feels, well, rewarding.
It's best to sit down and determine the payment for each chore. This pay-per-chore approach is a great opportunity to teach a little ambition too. The more they accomplish, the more they're rewarded. With all of that being said, a dollar or two a week is plenty for a young child and your teenager will need a little bit more. Blue Springs Outer Road branch manager April Lanpher reminds us that the amount shouldn't get in the way of the lesson, "Parents shouldn't lose their heads with a large amount of money."
- What to call the payment.
Both Dave Ramsey and Suze Orman agree on one thing. Don't call it an allowance. If the point of all of this is to teach your children about real world money, give your payment a real world name. Last time we checked, no one brings home an allowance from their job. Call it a salary or a commission. Either way, you're connecting the work directly to the reward.
- What to do with the money.
The lessons don't have to end once they have the cash in their hands. Jones sees the earning of money as only the beginning, "Even at a young age I think it is important to learn a couple of key things," she says. "Paying yourself first, making a budget/financial plan and not spending more then you make are all great skills you can teach your kids."
Consider setting up a savings account. Show them how real money earns real interest. You can even suggest setting up a money management plan where 1/3 of their money goes into savings, 1/3 can be spent and 1/3 is donated to a great cause.
No matter your teaching path, make sure that the point of giving your children money is to teach them its value. And when it comes to financial literacy, remember that they're never too old to start.
 When you contribute can be just as valuable as the amount.
For many of us, the task of tax preparation isn't coming, it's looming. Each year we all make a pledge to get our taxes done early. Each year too many of us are rushing to the post office in mid April. We've all been there, right? So adding a task to this crazy time seems, well, crazy. Unless it can help you in the short and long run. Contributing to your IRA can do just that.
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The Individual Retirement Account is one of the very best advantages Uncle Sam has given us as a tax benefit. It's simple really. The more you contribute, the less you pay in taxes. Sounds like a great way to lower what you pay, but if you concentrate on just the tax savings, you're missing the point. And it's right there in the middle of the name: retirement.
With that in mind, the best way you can help yourself is to not wait to add to your IRA in April or even in January the year that you file. As with anything involving savings for your retirement, timing is vital. The earlier you save, the more you'll have when you retire. And the difference in a few months, years down the road is astounding. Here's an example.*
A 35-year-old taxpayer decides to contribute each year for 30 years the maximum allowable amount into a traditional IRA investment that earns an average annual hypothetical return of 7 percent. 
If the taxpayer makes the IRA contribution on each tax year's filing deadline (for example, April 17, 2012, for tax year 2011), then the IRA will be worth $508,942 at retirement.
If, on the other hand, the taxpayer makes the contribution on Jan. 1 of each tax year (for example, Jan. 1, 2011, for tax year 2011, instead of the tax return deadline of April 16, 2012), then the IRA will be worth $555,226, or $46,284 more.
So when it comes to funding your IRA, waiting can cost you thousands. Even if the law gives you until April 17, your IRA can't wait. And the challenge is to have the discipline to save early and often. One great trick is to take this year's tax refund and put it right into your IRA in order to get a tax break for next year. Once again, that little maneuver takes a lot of discipline.
*This calculation assumes the maximum contribution will be made each year according to IRS regulations as defined in the Tax Relief Act of 2001 (the contribution limit is generally $5,000 in 2011, or $6,000 if you are age 50 or older). This calculation also includes the full catch-up contribution in the year the individual turns age 50 and every year thereafter (the catch-up contribution limit is $1,000 in 2011). Rate of return is calculated on an annual basis and is for illustrative purposes only; it does not represent any currently available investments. 
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