A parent’s job is to provide their children with the tools and confidence to become a successful and self-sufficient adult. Teaching them how to get ready for school on their own, do their homework and ride a bike are all rights of passage. Many people debate the idea of giving kids an allowance, but the truth is that this is an essential step if you want your kids to learn about money management. Especially now in the age of instant gratification where you can swipe or click to buy almost anything without much thought, its vital for kids to learn the value and importance of managing money responsibly. Here are some smart rules for giving your kids an allowance.
Starting out- One of the biggest concerns among parents considering giving kids an allowance is when to start. While there is always debate about this, you should really just gauge the way your kid sees money. When your child shows an interest in and understands the concept of money, then you can start to implement an allowance if you wish. Every child is different so there is no specific right or wrong age, just make sure they don’t lose or forget about the money and actually enjoy saving it or think about how they’ll use it.
Amounts- Again, this is subjective according to your family’s financial resources, as well as your child’s age. Some families would rather give a certain amount each week that may or may not increase with age, while others attach allowance amounts to various chores around the house. Having allowance amounts attached to chores helps kids understand the value of hard work and the clear and important concept of earning their own money, so this may be the more beneficial approach than a flat rate.
Restrictions- Your child is sure to learn from their own successes and mistakes when they are left to their own devices in using their allowance. However, giving free reign over blowing all of they money may not be the smartest decision. Set up allowance guidelines or a list of banned items. One way to do this is to allow you child to spend their allowance however they like, as long as it doesn’t cause a problem (for example, wanting to buy a pellet gun or a week’s supply of gummy worms).
Saving- Whether you allow your kids to spend their money on whatever they want or decide to set up guidelines, one thing to consider is having them save a certain amount. Of course you can restrict your child from blowing all of their allowance on candy, but a good idea is to have them save a portion of each allowance amount. Build in guidelines that reflect your values and require your child to save a percentage of their allowance so they learn the value and process of saving money.
Don’t use it as a punishment- The whole idea of an allowance is to develop greater trust in your child as well as better communication and cooperation. Avoid withholding allowance as a punishment for bad behavior or using it as an unexpected disciplinary tool. While it may be hard to give them allowance money when they’ve misbehaved or gotten poor grades, find another way to make your point while still holding up the original bargain.