Some say, “No,” while others say it’s okay to give your children an allowance. There is a rationale for both. Some believe that giving money to kids without expectations, breeds feelings of entitlement. They think that their children won’t be satisfied and will demand more money from the Bank of Mom and Dad. Others believe an allowance teaches children responsibility and decision making skills.
Everyone will make a money mistake. Your children will not be any different regardless which direction you take. They can make a money mistake under your roof. Today that simple mistake may cost them $5.00 or you can leave it up to them to learn how to do it on their own. Years from now, that same mistake might cost them $500 or $5,000! It’s up to you to decide.
An allowance is a good way to teach children about saving and budgeting. It may not be a surefire way to avoid ever making a mistake, but it just might prevent some undue hardships. How many of us have said, “If only I knew then, what I know now,” and felt a sense of regret? Probably far too many of us have felt that way, especially when it comes to managing money.
Below, I’ve gathered a few tips for parents who decide to give their children an allowance…
- Do not put your children’s needs before your own. If you cannot afford to give them an allowance, don’t.
- Tie their allowance to a goal or expectation. Tell them when they do their homework, keep their room clean and/or help their little sister or brother throughout the week, they’ll get an allowance. If they don’t follow through, they may not get any allowance or only a portion of it.
- Give them a savings goal. A portion of their allowance should be set aside for saving for something they really want or for a vacation that you are planning on taking. This teaches them the valuable lesson of savings and rewards.
- Set boundaries. Discuss with your children what their allowance can or can’t be used for. It is probably not a good idea for any child to use all their money at the candy store. Of course, it happens! I used to do it. It only took one troublesome trip to the dentist to learn that spending all of my allowance at the candy store was not as sweet as I thought!
- Make getting an allowance a big deal! I used to look forward to my allowance every Friday. When Grandpa, got paid, I got paid! It was a celebratory event. He’d check my grades at the end of the week and I’d receive my paycheck.
- Throw in a challenge! When your children manage their money properly or do some outstanding money feat like give to a charity or save for a goal, give them a raise!
Helping your children learn about budgeting and saving may predispose them to take control of their financial future. They are going to learn about money at some point in their lives anyway. As long as they are in your care, you can sit down with them and discuss their spending behavior and money management skills. An allowance today might reduce costly mistakes in the future.