The Importance Of Allowance
By: Shannon Wakeland
Do you give your kids an allowance?
If you do, then you have begun your child's journey with appropriate money managing skills. If not, perhaps it's time you started. Giving a child an allowance has many benefits, and it teaches responsibility in your child.
Deciding what to tell your child about money and finance will depend on his or her age and the ability to understand what money is, as well as where it comes from and what it is used for. What are the advantages of getting an allowance? It educates children on the importance of saving money today, and for purposes later in life. Giving children allowance guides them in the right direction towards making spending decisions and it also educates them on the importance of savings.
When should parents begin giving an allowance?
As soon as your child is old enough to understand how money is used in exchange for things that are needed or wanted.
How much should a parent give? Be reasonable about the amount you are giving to your children. What are they doing around the house to earn the money? Is it a daily or weekly basis chore? For instance, most kids begin an easy, delegated chore around the house, such as emptying wastebaskets once a week. For a preschooler, $1 - $2 a week is a fair amount. The older your child gets, appoint more chores on a daily schedule, or give them the option of what they consider reasonable. Sitting down together as a family, and making choices on household chores and finances, can aid in helping your child grow as an individual and into a responsible young adult. Below are a few guidelines parents may want to follow:
Decide if you want to give your child a weekly or a monthly allowance. Younger children may require a weekly allowance, as biweekly or monthly may seem too long.
Discuss the kinds of purchases the allowance should cover. For preschoolers, this may be a movie or video game they may want to rent. Or, it could be a new Barbie Doll or Hot Wheels Car. Older children may decide to use their earnings on a movie, lunch or entrance into a local park.
Encourage your child to give to a church or charity of their choice. This will teach the child the importance of giving to others.
Have your children learn that they have to save their own money to buy something they really want, instead of spending it on nonessentials, such as drinks, candy etc.
Explain to older children what you will pay for (medical bills, clothes, school supplies, etc.) and what they will need to purchase with their own earned money.
Figure children's allowance systematically. For older children, the amount may need to increase, thus giving the child an added chore.
Sit down with your children and help them prepare a spending plan for their allowance. Encourage your child to open a savings account. This will educate them on the importance of banking and account organizational skills.
One of the most important aspects of giving an allowance is that children develop their own independent thoughts, and learn to become responsible. Though allowance is good, children should also learn that chores are a team effort. There should be tasks that your child does, without payment, simply because they are a part of the family. This may be something as minimal as cleaning their own room, emptying the cat box, or even feeding their own pets. Discussions concerning money can begin as early as pre-school and continue on into their young adult years. Below are some helpful ground rules in educating your child about the responsibility of controlling money
DO help your child set goals. Educate them that saving their money will help buy something that he or she really needs or wants in the future.
DON’T give your child more money than their set allowance. This will teach them that saving is important especially for items of high importance to them
DO encourage your child to set up a spending plan. Give them an example of your own spending plan. For example… groceries, electric bill, gas expenses and extracurricular activities.
DON’T tell your child what they can or can't buy with their own allowance (in moderation of course). If they want to "waste" their own money on a video game, or a new piece of costume jewelry, and you believe it wouldn't be a wise choice, just bite your tongue. They have to learn what's important and what is not.
DO help your child establish a savings account and encourage them to save at least 10% of their weekly or monthly earnings.
DON’T debate over your child's first few money mistakes. They will make a mistake and they will learn from that mistake. Isn't that how you learned?
DO keep in mind that children, especially younger ones, will need encouragement and guidance in learning their tasks and duties. This will take time; remember they are young entrepreneurs and need all the help they can get!
DON’T hold back allowances as a punishment for something they did. You are also setting goals and limitations, and following a plan plays an important role in guiding children.
Keep in mind the reason you are giving your child an allowance; to teach them the value of money and to set the foundations that will nourish them through their adult years. Instead of giving him or her money for something they really want, show them the proper way to earn and to save. Show them patience. Teach your child that there are joys in working, and though it is not always fun, the advantages they reap will be rewarding. Discipline them on becoming responsible and even though there are many wants, there are also needs which are sometimes of more importance. This will teach them discipline, respect, and money management that will last them a lifetime.
Shannon Wakeland, author of several print and online publications, resides in Charleston, SC with her husband and seven year-old son.