Kids and Allowances

From WikiParenting

Allowance is defined as a sum of money granted to a person on a regular basis for expenses.

[edit] Why is it important for kids to have an allowance?

It is important for kids to have an allowance because it teaches them responsibility and how to manage money. A lot of money management problems in adulthood stem from parents waiting too late to begin teaching the importance of money. There are not often courses in school or hints on television or in books that teach kids how to save money. That could lead to problems because kids these days have more money to spend and can develop financial lifestyles at an early age. If kids don't learn from their money mistakes until later in life, the costs can be huge. The only way that children will learn to manage their money is through their own experiences and the guidance that parents give them. They learn from trial and error just like the rest of us. Therefore, it is important to start early! Knowing the limit of funds encourage kids to think about how much things cost and to make choices based on how much money they have and what they want. Allowances also teach children to be more appreciative of the things that they buy and how to take care of their things. Children also develop a sense of independence if they have their own money to spend.

[edit] When to start giving an allowance?

It is okay to start giving a child an allowance when he/she develops an understanding of the concept of money. By the age of three or four, most children realize that money can be exchanged for goods. That is when they need to start learning money management basics. It's never to early to start. Recent studies have shown that many 3-year-olds are ready to learn about how goods are bought and sold and by the time that they reach 5 years of age, many are already saving.

[edit] Should I tie it to chores?

Some parents do, some don't. Some parents feel that children should not be paid to do chores, while others consider it a good incentive. Keep in mind that the point of an allowance is to teach money management skills and shouldn't be used for bribery or it could send wrong messages to the child. Loss of privileges would be more appropriate than a loss of allowance if a child refuses to do what they are told.

[edit] How much should I give?

When coming up with an amount, consider how much money that you already give them. If kids are not given an allowance, you are managing their money for them by deciding what to buy and what to do with it. Add up the money that you spend on them now. Give that to them as an allowance every week and let them face their own battles. You'll save a lot of hassle. Also, sit down with your child and explain to them what they are expected to spend their allowance on. This will help clear up any confusion. As a child's needs change, so can the amount of their allowance.

[edit] Giving guidance to your kids about allowances

You can't tell them what to buy, but you can explain to them that their allowances can be used for purposes such as:

• Spending - a child can spend their allowance on whatever they please, such as clothing, candy, and toys, but they must also realize that when their allowance is gone, there will be no more.
• Saving - a child may choose to save their allowances for future purchases, such as the ones that cost more than a weeks allowance.
• Sharing - a child may choose to share his allowance by spending it on birthday gifts for family/friends or donating some of it to a charitable organization of some sort.

[edit] Things to remember about giving an allowance

• It's not too early to start.
• Choose an allowance program that is appropriate for your family - don't feel compelled by what others give their kids for allowances.
• Allowances should not be used as a form of bribery.
• Loss of allowances should not be used as a punishment - loss of privileges might be more appropriate.
• Don't wait until it's too late!