21 AUGUST 2008
HOW TO WRITE A KILLER RESUME
A good resume touts your talent and lands a job interview.
Think of your resume as an advertisement for yourself. But a resume that isn’t a winner is a sinner and you’ll never get in the door. Remember: Simple mistakes can kill your prospects.
“Many students don’t realize that a resume is one of the most important documents they’ll ever prepare,” says Jack Rayman, Director of Career Services at Penn State University. “Some students think they can throw a resume together in 15 or 20 minutes.”
As part of a study, Rayman says his office prepared a set of resumes with intentional spelling and grammatical errors and passed them on to campus recruiters from major companies. Without fail, the resumes with minor errors were rejected, regardless of the mock student’s internships, course of study and grade point average.
Moral: Check and double check your resume because presentation counts. Then have a friend read it over.
“A little thing like subject-verb disagreement will kill your chances,” Rayman says.
A winning resume is concise and well-written. Keep it to one page if you’re just out of school.
A solid resume is more than just a summary of your experience. It demands the attention of a prospective employer and sells you as a top prospect. Your pitch: This is what I can do for you.
Right under your name and contact information, a good resume should include a brief summary of your education, experience and strengths.
Three to six crisp sentences will do the job. Use the active voice. Keep it short and tight. No buzzwords or semicolons. Kill most adjectives and adverbs with a shovel. Never refer to yourself in the third person because it’s silly and pretentious.
As a recent graduate, employers don’t expect you to have a lot of experience. Include internships, but remember employers are betting on your potential to perform at a high level - not your limited track record in your field.
At a job interview, the prospective employer seeks to answer basic questions: Can the applicant fit into the corporate culture? What does the applicant bring to the table? You got the interview because the employer believes you can handle the job. Now, you must convince the interviewer that you’re the right person for the job.
Major corporations such as Intel (INTC), Microsoft (MSFT), Hewlett-Packard (HPQ) and General Electric (GE) are flooded with resumes. Many companies electronically scan stacks of applications looking for key words. If you’re applying to a major company, dig out the key words in your field -- programmer, copy writer, Web designer, for example -- and use them to boost your chances of getting picked up in the computer scan. But don’t let this degenerate into jargon because an experienced person with a finely tuned blather detector will read your resume in round two.
Don’t mix the professional with the personal. There’s no reason to include marital status, church affiliation or political persuasion on your resume. Include relevant extracurricular activities, but don’t note that you like kittens, hiking and Mozart, because who doesn’t?
This should be a no-brainer, but apparently some recent grads don’t think: Never lie on a resume. You can bet that the personnel office or an outside agency will check your degree and other qualifications.
A resume isn’t a legal document so the only penalty for fibbing is not getting the job. However, a job application is a legal document and that’s why many personnel offices ask you to copy key information from your resume onto the company’s form. Lying on the company’s job application will get you fired if discovered after you’ve gotten the job.
Here are five things you need to know about writing a resume that will get you noticed:
Contact Information:
At the top of the page, include your name, home address, phone number with area code and email address. This should be obvious, but some first efforts bury the information. Prospective employers don’t have time to hunt for the basics.
Typeface:
You can’t go wrong with 12- or 14-point Times New Roman. Avoid cutesy fonts and don’t use too many fonts because you want your resume to be crisp, clean and easy to read. Use bold or bold italics for section headers.
Be Positive:
Don’t knock your school, internships or anything else. A good resume is a sales tool designed to sell your talent and get a job interview. A sour tone will kill your chances.
Play It Straight:
Keep in mind that prospective employers aren’t flower children seeking blithe spirits for a far-out time. They’re in business to make money. Employers seek bright, talented and diligent people - make sure your talent comes through in your resume. Can the smarty pants attitude.
Presentation Counts:
Use a heavy, off-white paper. Avoid red, pink, lime green or anything that’s hard to read and makes you look frivolous. Prepare an electronic version that can be emailed as an attachment or sent in PDF format. Run the spellchecker. Then have an eagle-eyed friend proofread your resume. A typo or using the wrong word is the surest way to kill your chances.
“We suggest that our students come to the career center and have someone review their resume on the spot,” Rayman says. “It’s important to have several people go over your work before sending it to a prospective employer.”
5 JUNE 2008
6 MISTAKES MARRIED COUPLES MAKE
IF YOU AND YOUR partner are like most couples, chances are, you fight about money. Numerous studies have shown that money is the No. 1 reason why couples argue — and many of the recently divorced say those battles were the main reason why they untied the knot.
While anyone will tell you that talking about money is the first step in resolving problems, talk alone won't do the trick.
In fact, a recent study commissioned by SmartMoney magazine and Redbook found that more than 70% of couples talk about money on a weekly basis. So what's the problem? "Most of us don't know how to talk about money," says Mary Claire Allvine, a certified financial planner (CFP) and co-author of "The Family CFO: The Couple's Business Plan for Love and Money."
"People tend to be emotional and reactive about money, not strategic," she says.
When emotions run high, people tend to make fiscal mistakes. Allvine's solution: Approach family finances as if you were running a business. "If you put a business metaphor into the picture, you'd be surprised how much more methodical people are."
And so, to help make your next state-of-the-financial-union meeting run smoothly, we've assembled a collection of the six most common mistakes couples make when handling money issues, along with some advice on how to correct them. Do yourself a favor: Make sure all board members review this before you talk.
1. Merging the Finances
The Wrong Approach: United we stand, divided we bank.
The Right Approach: It's yours, mine and ours.
One of the first issues newlyweds face is how to handle their finances. "Couples struggle about this one," says Ruth Hayden, author of "For Richer, Not Poorer: The Money Book for Couples." Should you merge everything you have and earn into one joint account, or should you maintain individual accounts and open a joint one for household expenses?
SmartMoney magazine's survey found that the majority of couples (64%) put all of their money in joint accounts, while 14% kept everything in separate accounts, and 18% had both. "Married couples should try different ways of handling the money to see what works for them," says Ginita Wall, CFP and co-founder of the Women's Institute for Financial Education.
For many newlyweds, the right choice may be somewhere in the middle. "You should have some autonomy money, I should have some autonomy money, and we need to learn how to practice being a couple together with our money," says Hayden.
The advice is different when one spouse enters the marriage with a high debt load. (See our next point below.) But assuming you both have a clean bill of fiscal health, finding a way to blend finances comfortably without feeling like big brother is watching every financial move you make can dramatically cut down on fights. Over time — once kids and mortgages come into play — many couples find that merging all their finances is simply easier. But unless you're both comfortable with the idea, there's no need to rush things.
2. Dealing With Debt
The Wrong Approach: Your debt will ruin us; you must find a way to pay it off.
The Right Approach: It's our debt: Let's decide how to pay it off together.
Of all the issues that spark a fight, debt ranked No. 1 for most (37%) of SmartMoney's survey respondents. "That's one of the places where couples have most disagreement," says Hayden. Couples often don't see eye to eye on how much debt is too much and which kind of debt is bad.
Compounding the problem: in many cases, one spouse enters the marriage with a lot more debt than the other. "We saw that more frequently than we anticipated when we began interviewing couples [for our book]," says Allvine. "It's almost unavoidable. Even if you manage to get to your 20s or 30s without debt, you hook up with a partner who's in debt."
What to do in situations like that? Like it or not, once you're married, your spouse's debts can become your problem. Granted, you're not legally responsible for the credit-card balances ran up before you got married, or for any loans opened in your spouse's name alone — provided you keep your finances completely separate. (Unfortunately, all bets are off should you get divorced. For more on that, click here). But even with separate finances, your spouse's credit score will affect your ability to get joint credit. "It's a public [credit reporting] system, and what you do will absolutely affect the other," says Hayden.
For those couples not yet married, it may be worthwhile to think about a prenup, just to make sure that assets that one spouse brings into a marriage will always be protected from the other spouse's creditors.
But those who've already tied the knot should find a way to pay down the debts as quickly as possible, and without any late payments.
3. Keeping Spending in Check
The Wrong Approach: I'm a saver and you're a spender. That's the problem.
The Right Approach: We both spend, but on different things. Let's budget.
Your husband keeps nagging at you that you spend too much — but then comes home one day with a huge smile and — surprise! — a 70-inch flat-screen plasma TV. He happily explains how he sealed the "terrific" deal. You're definitely not impressed.
Sound familiar? Spending is the second most common reason why couples fight, according to SmartMoney's survey. What usually happens, explains Hayden, is that one spouse gets labeled the "spender" and is blamed for skimming all the money out the checkbook. In most cases, however, that's not accurate. "Studies show that men and women spend the same, they just spend differently," she says. Women usually take care of most of the family's daily expenses: the groceries, the bills, clothes for the family — while men spend on large purchases like plasma TVs, cars or computers. "If you counted up your money, you would be spending about the same," Hayden says. "But because you spend so differently, the perception is different."
The solution here is to identify the real problem, Hayden says — namely, that you're both spending money on a tight budget. Then sit down and decide how much money you'll allocate to the "dailyness" of life, and how much to save for the big purchases. "What we're trying to do is get the 'Surprise!' out of it," she says.
4. Investing Wisely
The Wrong Approach: You're a risk-taker, I'm risk-averse. Hands off our retirement savings.
The Right Approach: Let's think in time frames and take as much risk as our goals allow.
SmartMoney's survey showed that when it comes to investing, men are more willing to take financial risk than their wives (62% for men vs. 19% for women). But fighting about how much risk to take with your investments based on how you feel about risk doesn't do much good. Rather, sit down and talk about your investment goals and time frames, says Christine Larson, co-author of "The Family CFO". "You could be completely risk-averse with money you need for next year, but you can be a huge risk-taker with money you're saving for retirement," she says. If that doesn't work for you, seek the help of a broker or a financial planner.
Whatever your investment choices, review your investments together at least once a year and make sure that, overall, your portfolios balance each other out, suggests Wall. "I have one couple — they're in their 70s. She likes to take risks and it scares him to death, so they do invest themselves separately," says Wall. "We let her take risk with part of the money, but not all of the money."
5. Keeping Money Secrets
The Wrong Approach: What my spouse doesn't know will never hurt him/her.
The Right Approach: Big financial secrets can ruin a marriage.
Among Hayden's clients is a family that first came to see her when the wife found out that her husband had lost a lot of money trading commodities. The real problem? She didn't know his little secret. "It got them in horrible trouble!" Hayden says. "He's very steady, he's a fabulous doctor, he's a great dad...but he had this other part of him that's pure gambler, and it almost brought the marriage down."
Will you be shocked to hear that most couples do keep money secrets from each other? While secret trading or gambling may not be that common, our survey saw 36% of men and 40% of women confess that they had at one time or another lied to their spouse about the price of something they bought. "It's the most common secret," says Wall.
Is it a big problem? Depends on how you deal with it. "Most people also lie to themselves about what they're spending, just as they lie to themselves about how much they're eating," says "The Family CFO" author Allvine. And let's face it, if your wife saved up the extra $100 for her "only $30" Givenchy scarf from her monthly mad money, it's not that big a deal. But if your spouse has been squirreling away thousands of dollars, it may be time to seek the help of a family finance professional. "If this happened in a company," Allvine says, "they'd call it embezzlement."
6. Emergency Planning
The Wrong Approach: We're fine. We don't need to worry about money.
The Right Approach: Anything could happen. Let's plan for emergencies.
Even if you have a great career, earn a comfortable living and don't have to worry about debt, you could find yourself woefully unprepared for an emergency. "Couples today are under so much stress that anything could tip them," says Hayden. An unexpected pink slip, an accident, illness — anything could throw you off track if you don't have an emergency savings account.
"With the couples we interviewed, we found a tendency to panic [in an unexpected emergency] that could lead to the wrong decisions," says Larson.
Bottom line? All couples should have an emergency stash of three to six months' worth of living expenses held in a safe place, like a money-market fund or gold. Simply knowing it's there can reduce stress, since you know you're not walking a fine line between comfort and catastrophe.
4 APR 2008
5 Retirement Maxims
Human beings, it is said, are distinguished from our animal cousins (no slur against the in-laws intended) by our ability to plan ahead. While that may be true, it's difficult enough for most of us to plan anything just six months ahead, like summer vacation. So how on earth are we supposed to deal with something in the distant future -- like retirement?
In an effort to kick-start your retirement plans, we'll take a cue from the animal kingdom's "fight or flight" mentality and scare you into action: If you don't do something right now to assure your retirement, you'll end up living in an alley fighting the stray cats for your dinner.
Now that we've raised your hackles, let's use that surge of adrenaline to your advantage. As you know, retirement brings on a set of extremely complicated decisions -- many of them all at once. However, when it comes to The Eternal Truths About Retirement (I'm going to see about patenting that title), the rules are pretty simple. Below, on this single page in cyberspace, are the five retirement truths that will prepare you for the future when it turns inexorably into the present.
1. This isn't your parents' retirement.
Think back about 30 years. Individual retirement accounts (IRAs) were just being created. There were no such things as 401(k)s. Gasoline was free. (Or at least it seems that way in hindsight.) Older folks relied on the proverbial three-legged stool to prop them up in their golden years: Social Security, pension checks, and savings. Retirement didn't last too long because life expectancies didn't go far beyond the age of 70. The average male didn't even make it that far.
Your retirement will be very different. You will live longer, and you'll have a more active (read: expensive) lifestyle. Your parents may have survived on 70% of their pre-retirement income (perhaps you've heard this common rule of thumb?). But that's probably not enough for you.
2. No one's got your back. Sorry 'bout that.
If you put your retirement on that proverbial three-legged stool, there's a good chance it's going to collapse. Why? Let's do a little structural engineering and see how each "leg" is holding up.
Social Security: As of 2004, the average annual Social Security retirement benefit is approximately $11,000. In other words, retirees cannot live on Social Security alone. And don't expect that to change. As the baby boomers retire and put a strain on Social Security, benefits will have to be cut or taxes raised. For those in or near retirement, your benefits are pretty safe. (See? We don't have it out for the in-laws at all.) For the younger crowd, don't count on receiving all of the benefit estimated in the statement sent to you by the Social Security Administration every year, three months before your birthday.
Defined-benefit plans (a.k.a. traditional pensions): The amount you'll receive from a traditional pension depends, first of all, on whether you work for a company that offers one. Most of us don't. In fact, only 20% of Americans have such a benefit, down from 40% in 1975. If you are among the lucky one in five, the benefit you'll receive is based on your salary and the number of years you worked for that employer. Since we've become a mobile workforce, many people don't stay in a plan long enough to accrue significant benefits. The average annual defined-benefit payout is less than $10,000. Plus -- unlike Social Security benefits -- most benefits aren't adjusted for inflation over the years.
Savings: Of the three legs that may prop up your retirement, your personal savings are what you have the most control over. So while two out of three of those stool legs have some pretty serious cracks, this leg is as strong as you want to make it. Thd good news is that this one decision -- to save or not to save -- will have the biggest impact on the quality of your post-work life.
3. It's never too early -- or too late -- to warm up your nest egg.
You can brag all you want to your son-in-law about that 34-inch waistline you maintained through your 30-year high school reunion. Photographic proof is all you need to keep that young whippersnapper in line.
Same with savings scenarios. We can yammer all we want about the factors that affect the size of your nest egg. Instead, we'll regale you with a few pictures.
Even though each person invested the same amount of money, they have significantly different amounts at retirement. For example, Investor A began investing $5,000 a year when she was 25 years old and stopped when she was 35. For the next 30 years, she didn't contribute any more money and she didn't withdraw any money. She just left the account alone.
Investor B, on the other hand, waited until he was 35 years old and contributed $5,000 a year until he was 45. As you can see, that difference of a decade is substantial. At retirement, Investor A has $422,5671 more than Investor B -- over twice as much. In fact, each investor in the chart above has more than twice as much as the person who started 10 years later (except for Investor D, of course, but she's a lot better off starting at age 55 than someone who waited until age 65).
As you can see, three things -- that are completely under your control -- can have a sizable impact on your retirement kitty: 1) how much you invest, 2) the rate of return you earn on your investments, and 3) the number of years those investments have to grow. No matter your age, the sooner you start, the more money -- and options -- you'll have.
4. There's really only one place your retirement savings should go.
While we've got our calculators out, let's take a look at various investments' average annual returns from 1926-2003 (source: Ibbotson Associates):
• Treasury bills: 3.7%
• Intermediate-term Treasury bonds: 5.4%
• Large-cap stocks: 10.42%
• Small-cap stocks: 12.7%
If investments squared off in a basketball game, stocks would be Michael Jordan and bonds would be Michael Jackson. In other words, stocks beat the pants off of bonds. But not without drawbacks. I often get questions from early retirees (55-year-old whippersnappers, for instance) who wonder if 50% of their investments should be in bonds. Phooey.
Market risk (the chance you will lose money) and reward (the chance that your investments will head skyward) travel hand-in-hand in the daily marketplace. The greater the risk, the greater will be the potential return for taking that risk. Equally true is the potential for loss, which quite handily explains why taking that risk should pay a greater reward. By and large, however, risk is pretty much a short-term phenomenon. That's particularly true in the stock market, which many regard as a quite risky investment.
Fools recognize that the stock market shifts every day, sometimes sharply downward. That can be absolutely gut-wrenching when it occurs. Heck, from 2000 to 2002, many people lost more than half their life savings in the market. But history shows us that the inexorable pressure on the stock market is upward. The biggest bang for our buck will be found in stocks.
According to Jeremy Siegel's Stocks for the Long Run, for every rolling five-year investing period from 1802 to 2002 (i.e., 1802-1807, 1803-1808, etc.), stocks outperformed bonds 80% of the time. Stocks beat bonds for 90% of the rolling 10-year periods, and essentially 100% of the rolling 30-year periods. For holding periods of 17 years or more, stocks have always beaten inflation, a claim bonds can't make.
Think now about your retirement. When will it occur -- 20 years from now, five years, tomorrow? If you're close to it, or are already retired, how long must the money last? Now think about your retirement investments. Is the bulk of your money positioned for long-term growth (read: stocks) or short-term stability and income (read: bonds and bills)? The mix you have in these instruments is something you must decide for yourself.
After all, you're the one who has to sleep at night. Recognize, though, that investing for retirement is a long-term goal. Hence, you truly want to shoot for the best growth in your investments that you can get. That won't be found in bonds or bills over the long haul. If you elect to keep most of your money there, almost assuredly in retirement you will be eating Beanie Weenies instead of sushi.
5. When Uncle Sam (or your boss) gives you an inch, take a mile.
As we approach the end of our room in cyberspace (we did promise all the retirement truths you need to know on a single page, after all), we come to our last revelation. It is, quite simply, this:
Be greedy.
As the number of defined-benefit plans has declined, the number of defined-contribution plans -- e.g., 401(k)s, 403(b)s, and 457s -- has increased. Your contributions to such a plan lower your taxable income dollar for dollar, so you immediately cut your income tax bill. (Be greedy!) Plus, the investments grow tax-deferred -- i.e., you don't pay taxes on the growth and income until you make withdrawals in retirement -- leaving more of your money to compound through the years. (Take it! Take it!) As a third bonus, your boss might pay you to save by matching your contributions. For example, the company might add 50 cents to your account for every dollar you sock away. (Freebies! Grab! Grab!)
So, now you know. These five truths about retirement should help clear your mind; why not take a few moments more, get a pencil and paper and jot down some ideas to take action toward securing your future...today.
20 FEB 2008
5 Steps to Fixing Your Credit Score
If a low credit score is limiting your ability to get a car or home loan, there are five basic steps you need to take to raise it.
The process isn't complicated, but requires the basics of discipline and common sense. Remember: There are no immediate fixes and repairing the damage takes time.
"You've got to stop digging the hole before you can get out," says Gail Cunningham, Vice President for Business Relations at Consumer Credit Counseling Service of Dallas. "You've got to freeze your spending. It won't get better tomorrow unless you do something today."
Start by cutting up unsolicited credit card offers that arrive in the mail. Accepting similar deals allows you to run up large balances on several cards and transferring the balances to one card doesn't reduce the amount owed. Worse, the low introductory interest rate on a new card is likely to encourage more spending.
But don't cut up all your current credit cards. There's no need to conduct all transactions in cash. Creditors tend to view someone with no credit cards as a higher risk than someone who has managed a few cards well.
One major bank credit card and one oil company credit card should be enough. Use a debit card when possible because there's a direct link between spending and your bank account.
Leave your credit card at home when you visit the mall. This will eliminate impulse buying. If there's something you need – not just want -- it will be in the store tomorrow.
These steps should stop you from digging yourself into a deeper hole. Here's what you've got to do to rebuild your credit:
Step 1: Get your credit report.
Federal law requires the three major credit bureaus to provide consumers with one free copy of their report each year. To download and print a copy from Equifax, TransUnion and Experian, click to www.annualcreditreport.com, the official Web site for free reports.
Step 2: Pay your bills on time.
You've probably overlooked this basic point in the past – that's one reason why your credit rating stinks. Remember that late payments – or worse, collections – drag down your credit score. So, build a record of timely payments. The longer you make scheduled payments on time, the higher your score. While a good sign for potential creditors, paying an account that's been turned over to a collection agency in full won't remove it from your credit report for seven years.
Step 3: Keep your credit card balances low.
Revolving credit can be seductive and misusing it can be a hammer on your credit score. Potential creditors check how much outstanding debt you carry so pay off existing debt as quickly as possible.
Don't open new accounts in an effort to boost your available credit. Creditors want to know how long your accounts have been open. So, opening a slew of new accounts won't improve your standing and will make you look like a bad risk.
Step 4: Learn from your mistakes.
Oddly, once you're on the comeback trail, you'll find it's easier to err because your finances are in better shape. It's much like dieting – mints look manageable after losing 25 or 30 pounds.
It shouldn't be hard to figure out what you did wrong in the past to damage your credit rating. It should be unambiguous what you need to do to avoid similar flubs in the future.
The trick is putting the theory into practice. That requires changing your spending habits and your attitude about saving. To do that, ask yourself a basic question: Do you want credit to work for you in lower rates for a home or car loan or do you want to be a slave to your credit cards, never quite catching up to the balance due?
Step 5: Write a budget – and stick to it.
Your budget doesn't have to be fancy, but should include the basics: Rent, groceries, car payment, maintenance, clothes – and savings.
Keep track of what you spend. You don't have to crank up the spreadsheets – a notebook will do. Label the left half of the page "income" and the right half "expenses." This will help keep spending in line. If you don't know what you spend each month on movies and eating out, your hand-written account will soon provide the answer.
Open a savings account and set aside a pre-determined amount each month. This will force you to cut spending, and that's just what you need to do as you rebuild your credit rating.
Saving is basic to sound personal finance. Some financial planners say 10% to 20% of gross family income should be stashed in savings. Others suggest saving enough to cover household expenses for three to six months.
"If you're hiding purchases from your spouse and having the bills sent to a Post Office box, it's time to talk to a credit counselor," Cunningham said. "Debt follows you everywhere – it's there when you wake up in the middle of the night and it affects your performance at work and damages your ability to be a good parent."
16 JAN 2008
5 Questions Answered About Your Child's Allowance
If you’re a parent, you’ve wrestled with the allowance beast. How much should we give? What age should we start? What expenses should it cover? These issues are worth tackling as early as you can. Kids learn valuable life skills from making money decisions, starting as soon as they can identify coins and count change.
And there’s something in it for you, too, as a parent, beyond serving up mere lessons in personal finance. The sooner your kids can stick to a budget the sooner you can stop playing ATM every time they walk out the door. This is especially irksome in the teen years, when their list of “needs” grows exponentially and includes things you’d rather not know about—like underwear from Victoria’s Secret and dozens of on-demand viewings of American Pie.
Why give allowance?
The idea isn’t just to break free from the routine of having to dig every time your kids want something. Budgeting is a critical life skill, one your kids must become adept at before trekking off to college where they will be swamped with credit card offers. Evidence suggests that as many kids drop out of college due to debt-related stress as from academic struggles. Kids who learn to budget in high school have fewer credit problems as adults.
Teaching budgeting skills is a critical parental role, and no method is more efficient than setting an allowance; make it clear what that money is to be used for, and stick to your guns. Cold reality hits your child when they have run out of money before Saturday night, when the other kids are going to the movies. This usually doesn’t happen more than once or twice before your child starts to seriously plan.
Should they work for it?
There’s a lot of debate on this issue. Certainly, tying allowance to chores teaches a life lesson—that you only get paid when you’ve done your job. But, to me, chores are about another life lesson—that you must contribute some effort to be fully engaged in any community, from your family to your school to a club or your faith group. Allowance is about teaching money management skills. If you dock your kids because they didn’t take out the trash, you deprive them of that lesson.
When should you start?
First grade, give or take a year. Kids at this age don’t need much. But you can help them get in the habit of spending, saving and, yes, giving to charity. They’ll grow to understand the power of money and all that it can do.
How much?
Some experts say the dollar amount, paid weekly, should equal the child’s age. That’s a good place to start. But this really depends on what you expect them to do with the money, and clearly by the time they are in high school they’ll need more if they are paying for clothes, gas, and X-box 360s. You should give enough for them to plan for near-term and long-term purchases and still have enough to go to the movies and offer something to charity.
How should they be paid?
Young kids should be given cash once a week. By high school they should have their own checking account and/or prepaid card that gets automatically replenished weekly or bi-weekly. By college, if you are still paying allowance, it should be once per semester.
Pre-paid cards are especially useful for teens, who buy so much stuff online today that they need to be able to transfer money electronically. But cards like Allow (Mastercard) and Upside (Visa) come with startup charges, and monthly maintenance and reload fees. If you’re dealing in small amounts, they are probably too expensive. Instead, open a checking account in your child’s name but linked to your own so you can make easy transfers. Get your child an ATM card, but make sure the account does not permit overdrafts. Your children will be on their own, and you’ll be out of ATM business.
More on this later...
