Should You Give Your Kids an Allowance?

images (47)Everyone has attitudes and feelings about money which are based upon observations and experiences of childhood. How money was handled in a your family when you were a child will greatly affect how you handle money with your children. My husband and I started giving our children, ages 13 and 15, a monthly allowance a couple of years ago. Now that I see how valuable having their own money is, how helpful it is in teaching them important lessons and concepts in personal finance, I regret not starting sooner.
At some point in every parent’s life, there comes a time when it is impossible to avoid confronting the word “Child Allowance”.
Yes, that’s right. I’m talking about whether or not to give your child an allowance.
So here are my top reasons for giving children a weekly or monthly allowance.
Allowances are powerful things. They are a child’s first exposure to the power of personal choice. It is for this very reason that parents approach it with a mixture of fear and trepidation. To some, it is the quintessential way to teach children financial literacy as well as character traits like patience, thrift or savings and generosity. To others, however, allowances are dangerous things that take away parental power and authority, and teach nothing more than greed. These children at the age of teen should be exposed to financial reasoning so that when the eventually begin to earn the must have had enough experience on financial issues.
Avoid Unnecessary Purchases
Now that they get an allowance, we still buy their necessities, food of course, basic clothing and shoes, school supplies and books etc. The beauty of the allowance system is, that when it comes out of their own pockets, the children are much more selective about their purchases. When it’s “our” money, they want to buy everything in sight, but when it comes out of their own allowance, they think twice before buying an item.
No chores necessary.
Children are simply given money (usually weekly) and are either free to do what they want with it, or they must allocate it in specific ways. When you give a child of age 13 her weekly allowance, you also sit her down and guide her on how she should spend it. Make sure you let her inculcate the habit of spending and accountability. For example, you gave $5 but she is free to spend only $1 of the remaining $2, one must go into a savings jar and the other must go into a give jar for a cause of her own choosing. “She spends a lot of time thinking about that,” – teaching her reasonable reasoning.
The upside of this approach is that it teaches children to think carefully about how money is spent. The downside is that it teaches them that money comes from an authority either as a gift or as an income. This will teach the child how not to spent outside what they earn -avoiding debt
Teach Them To Save Towards a Bigger Goal
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My kids receive some certain amount per week each, in addition to other gifts. They may also earn extra money when they do extra chores beyond their daily chores. Since we buy the basics, this gives them a nice amount of cash, especially if they manage to save. In fact, one of the best things about an allowance is that it enables kids to see very clearly that if they delay gratification for a while, those allowances will grow to a bigger savings, and combined with cash gifts they could find themselves being able to afford reasonable nice items – whether clothing, accessories for their room or computer games.
Teach Them Responsibility
Now that the children have their own money, they learn responsible behavior and taking responsibility for one’s actions. As a matter of fact, one of my kids was in the habit of misplacing her jacket at school. When she was younger, there wasn’t much I could do except buying her new jackets every time she forget it. Later in the year, I told her that if she lose a jacket again it will be replaced from her allowance, believe me honestly since then she has not lost this jacket.
Give children Independence
Kids have so little independence these days. An allowance is a wonderful way to give them complete control over something and enable them to make their own decisions. I try very hard not to interfere with my kids’ decisions on what to do with their allowance. As long as they’re not buying something dangerous or inappropriate for a child, they can do whatever they want with their allowance. They love this independence and they absolutely do not abuse it – on the contrary, they are very responsible with their money and they spend it carefully and wisely.
Children often receive gifts of money on
birthdays and other special occasions. Whether or
not cash gifts given to children are theirs depends
upon cultural backgrounds and family rules.
Parents and children should each have a voice in
how the money is used. The final decision should
increasingly become the responsibility of the child
as s/he grows up. Parents play an important role
in helping children decide whether to spend or
save money. Since money gifts are received on an
irregular basis, parents might encourage children
not to include them in spending plans. These
surprise funds might be invested in some form of
savings for future use. Saving money gives your
child the opportunity to establish some long-term
goals and provides the means to implement them.
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