Children also learn from experience, so apart from setting a good example, parents should give the children practice in handling money. This is where an allowance can play an important role.
Why Give Allowances To My Children?
An allowance can be a good teacher because it allows children to manage money in a safe environment. The sum involved is small and any mistakes made will not be too damaging. It is not like when they are adults and the mistakes made can cause them to lose their house or car.
Allowances can teach them financial responsibility. For example, when your child wants to buy a new toy, she can be asked to save part of her pocket money to get it.
Depending on the age of your child, she may need help to achieve her goal (i.e.,the toy). This gives you an opportunity to help her develop a spending and savings plan so that she will know how much and how long she has to save to buy her toy.
Saving for a toy will teach your child about delayed gratification. A child who has enjoyed the fruits of saving up for a toy may be less likely to be taken in later by the various choices of instant gratification like credit cards, easy payments and hire-purchase payments.
Thus allowances give children a chance to make mistakes that are not too costly, to think about the value of what they want, to experience anticipation if they save for a few weeks and even to feel the consequences of overspending.
Do not make a practice of giving additional money if your child overspends. If parents is quickly to bail out the child, the child will not learn the consequences of overspending.
Should your child overspend, she will then have to get a loan from you to meet her expenses. Set up a repayment period to give her some practical experience in using credit.
But if your child keeps overspending it should be time to put her on a simple budget.
How Soon Should I Give Them Allowances?
Your child probably ready for an allowance when she enters primary school. She should be old enough to handle money to buy food at the school canteen.
How Much Allowances Should I Give To My Children?
How much money your child is entitled to will depend on how much you can afford and how much food in the canteen costs. You may also want to have an idea of how much pocket money her classmates are getting.
Parents and child should agree on just what the pocket money is supposed to be spent on. Even if it is only to be spent on food in the canteen, give a little above so that your child can practice decision-making.
As adults, we make spending choices and not all of our choices turn out to be the right ones. Learning to live with the results of poor choice in spending money is a valuable lesson, so let children make mistakes and learn from their mistakes.
How Often Should I Give My Children Allowances?
At the very beginning the pocket money can be paid daily since your child is young and is not used to handling money. But as your child grows up the allowance can be paid weekly and when she reaches her late teens it can be paid monthly.
The longer your child has to wait for the next payment of pocket money, the more she has to practice her budgeting skills.
Whatever your definition of the good life though, money plays an important part in it. However, there are many people who believe that the good life is possible only with the 5 Cs – credit card, condominium, car, cash and club membership. This definition of the good life is not only very materialistic, it is also incorrect.
Another problem is that people feel that they have to own the goods and gadgets associated with ‘modern living’ even though they may not be able to afford them yet.
