Give your kids the money they want with the economic lessons they need.

So your children, who double as employees (taking out the trash, picking up their rooms,) want more money. This is exactly how the Rothschilds must feel.

Like the head of any good dynasty, you must raise their allowances. Yes, we’re on your side here, stay with us a minute. Because we’re going to tuck a few teachable moments into this finance deal.First, we’re going to tell them why they’re getting raises and rest assured, it’s not because they didn’t once forget to walk the dog. (That’s why they didn’t get fired.)

They can thank something called inflation – the increase in prices for goods and services. Say it with me kids, inflaaaation.

Did you notice how the box of Chocolate Chip Delights contains fewer cookies but costs the same? That’s inflation. Do you remember how the video games required more tokens? Or how the price of summer camp went up by 10 percent. Well we remember, alright, and that’s inflation. The average increase in prices.

To watch price increases (and sometimes decreases) economists look at something called the Consumer Price Index (click here to learn how the goverment tracks prices) and you can too. They’re really easy to read and simply show you the average price increase for some of the critical things kids buy.

Item                                     Prices change from last year

Candy and chewing gum:     1.5 percent higher

Food from vending machines:     3.7 percent higher

Girls clothes:     0.3 percent higher

Movie admissions:     3.8 percent higher

Admission to sport events:     6.7 percent higher

Pet food:     2.9 percent higher

Sport equipment:     0.4 percent higher

Video rental:     3.4 percent LOWER

Toys:     5.9 percent LOWER

Music instruments:     0.8 percent higher

Cell phone service:     0.8 percent LOWER 

College tuition:     4.0 percent higher

Look at these numbers and decide with your kids where they spend most of their money.  Then make ’em do math, figuring out how much of an increase they deserve. Big movie buffs should multiply (0.038 * their current allowance) = increase. If they’re earning $10 a week, they’ll now earn – yes – $10.38 cents.

See, we are on your side.