Piggy-Bank Blues

When it comes to money, my parenting style lies somewhere between that of the Godfather and a game-show host: after the family’s needs are met, everything else is negotiable. Periodically, I’ve taken a page out of the Good Parent’s Rule Book and given my daughter an allowance, usually accompanied by a little speech about money management, the go-go stock market and the magic of compounding interest.

Unfortunately, I also tend to poach the bills out of her piggy bank late at night to pay the baby sitter or the pizza guy. (One night I even dipped into her petty cash to slip a buck under her pillow from the tooth fairy.)

According to surveys, about half of parents don’t grant allowances, and most others do it the way I have–haphazardly. Its proponents argue that an allowance can help a child learn about money, that he has to make choices among the many things he wants and must work and save for them. But there’s a downside: an allowance can be a crutch for a parent. As long as the child can afford to pay for something–say, a barbed-wire wrist tattoo–a parent might be more reluctant to say no.

Some parents also connect money to household chores or grade performance, which I think is a mistake. Your child should help at home because he is a member of the family and should work hard at school without a financial incentive.

Carol Seefeldt, a researcher on children’s concepts of money at the University of Maryland, says that “if you want children to learn to make wise decisions and plan and budget, they need more than an allowance to do that.” She suggests that parents involve kids in simple decisions involving the cost of meals and clothing and teach them to help comparison-shop for the family.

Our children are already bombarded with opportunities to spend money, and the options are about to explode through online shopping geared specifically toward kids. Several new websites, such as Icanbuy, Rocketcash and DoughNet, will set up accounts in a child’s name. Parents can deposit a small amount from a credit card or use Grandma’s birthday money as their child’s online slush fund. These cybermalls are only too happy to point your child toward must-have products. They also offer FDIC-insured banking services so that little Timmy can watch his money earn interest between spending binges.

I guess that’s a start, but we can do much more to teach our children that money is not just for spending. No matter what the source of their income, whether earned or from gifts, children should be encouraged to save and to give. A system of three piggy banks–one for spending money, one for saving and one for contributing to charity–is recommended by many money experts. Online sites can also teach about investing: younginvestor.com is a good one.

In our house I’ve offered to pay my daughter to take on jobs that I might otherwise pay an outsider to do, such as shoveling snow from the walk or raking leaves. But we’re abandoning our allowance farce–after I repay the $257 I owe her. Fortunately for me, she has generously offered to let me retire that debt at low interest, in weekly installments–you know, kind of like an allowance.

For more on teaching kids about money, see our website at time.com/personal You can e-mail Amy at timefamily@aol.com