Can I Decide How My Child Spends a Monetary Gift?
Q. My young daughter received money as a gift. Can I decide how she spends it?
A. Most children under the age of 10 need adult guidance to determine what to do with their cash, says Lynnette Khalfani-Cox, a coauthor of The Millionaire Kids Club book series on financial responsibility. If the amount is nominal—say, under $15—have her save half and spend half. If the gift is more substantial, consider it an opportunity to teach money management. Suggest splitting the funds four ways: Have her spend one-fourth, save one-fourth for an item or experience she can’t afford right now but may be able to in the future, give one-fourth to a good cause (a church collection or a school fund-raiser), and put one-fourth in an interest-accruing account.
Once she’s in middle school or beyond, let her decide how to use the money—as long as the gift doesn’t exceed $100, in which case you may want to weigh in. If she fritters it all away and regrets her choice later on, chalk it up as a learning experience.