In this Prager U video, narrator and personal finance expert, Rachel Cruze offers three principles for raising kids to be smart about money. Very sound advice overall, although I would not dismiss the use of allowance as a money management teaching tool, as she does. Cruze is correct that when children earn their own money, they will experience “accomplishment” with their purchases, rather than “entitlement” as when money is given to them to spend. She views allowance as a form of giving money for “breathing” (i.e., for nothing).
When parents actively teach their children money management with the use of allowance, then it’s not for nothing. Cruze suggests that children should “work” for their “pay” by doing age-appropriate chores around the house.
Allowance or payment for chores? Which is the better money management teaching tool? Parents will know the answer, because they know their children.
Hazel Fluke, Financially Speaking 