Kids with cash: execs use allowances to teach fiscal responsibility.

• Author: Bjorklund, Todd
• Position: Executive Living - Allowance program, handling money responsibly

WHEN IT COMES TO ALLOWANCES, there are as many plans as there are parents. Experts don't agree on how much to pay, what to pay for, or what to expect children to do with their money. One of the few things that experts do agree on is that the primary goal or an allowance program should be to teach kids to handle money responsibly, not just to give them some cash or to get chores done. The three financial services executives interviewed for this column have all taken that goal to heart with their own children.

Gordon Dames, CEO of Mountain America Credit Union, says that he and his wife began paying allowances to their children to teach them "that money is a commodity." They started giving them a "reasonable allowance" for doing chores at about age 7 or 8. Dames required his children to save half of their allowance, and they always had to have a savings goal, such as a bike, a prom dress or college. When he started giving the allowance, Dames took each child to the credit union to open their own savings account. He believes that having a savings account helps kids learn the value of money because they can only get ahold of it for something special.

After the kids turned 16, Dames encouraged them to get part-time jobs to earn their own money, "free of allowances and expectations." Once they had jobs, the allowances ended. "As soon as kids start earning their own money from their jobs, it has a whole new value, and the allowance is the first step towards that," says Dames.

Becky Kearns, senior vice president of Zions Bank, opened savings accounts for her two boys, now ages 10 and 13, the day each was born. She and her husband began paying allowances at about age 8, wanting to ensure that their children "understand how money works, that it doesn't just come out of an ATM." Her children have chores they must perform, and every Friday they report to their dad, who pays the allowance. Half of the allowance is put in their savings accounts. Each month Kearns and her husband review their sons' bank statements with them, as well as long-term goals: Both kids know what it costs to go to college.

To start teaching her eldest "to understand how money is made," Kearns opened an investment account for him two...