Why Kids Should Earn Their Money Print

It is possible for kids to still be kids while they are earning some money. Kids can earn money through a number of outlets, such as an allowance, that will not interfere with school and other activities. Hard work and the basic understanding of finance that is learned when kids earn money, are invaluable when they grow into adulthood and earn money on a full-time basis. Here are the top five reasons why kids should earn their money.

They will learn to work hard. Children shouldn't find hard work and earning money to be foreign concepts upon entering adulthood. A good work ethic is something that develops over years of gradual exposure to a job well done, and when kids earn money, this work ethic develops sooner. An allowance can be based on simple chores, small jobs, and responsibility for their own space and possessions. These responsibilities will give them an understanding of finance and make them productive adults with few qualms about putting in a hard day's work.

Kids will appreciate what they have and the money they earn. Thomas Paine's famous quote, "That which we obtain too easily, we esteem too lightly" is never truer than when it's applied to a child; which is why earning money is beneficial for children. By allowing children to work for the money allowance they need to buy things, they will value everything they are given, as well as the money they earn to buy things for themselves. When kids are allowed to earn money, material possessions will have more meaning and will be treated better.

Kids will know how money works. A coin or any amount of money is more than a nice, shiny object when it has been earned and destined to be saved or spent. A basic understanding of the world of finance is best achieved by allowing children to participate. An allowance earned can be used for saving, spending, investing, or sharing, which helps to give children an understanding of finance and responsibility over their money. If taught early, children who earn money can be better prepared for wise financial decisions later on.

Children will be motivated. Many adults wouldn't work a job if they didn't get paid. Likewise, children who are otherwise unmotivated to help out may find a new reason to pitch in if they are fairly compensated with an allowance. While the goal is not to raise purely capitalistic helpers, whose only interest is to earn money, it may just be the thing uninspired kids need to get them moving.

Allowing your kids to earn money can help offset your taxes and save money. If you operate a family-owned business, you can hire your own minor children under age 18, without worrying about income tax withholding, payroll taxes (excluding S or C corporations), or Workman's Compensation (in most states.) Be sure to pay your children what they're worth, pay your children consistently, keep detailed records, and issue a W-2 to your children at the end of each year. You will find the tax savings to be generous, and your children will value being part of a thriving family-owned business, as well as gain a better understanding of finance for their future.

Having kids earn money is good for them. Best of all, it's good for everyone! Raising responsible and financially aware adults is a goal that all parents should have. Starting early will bring rewards for a lifetime.