Starting your child up on an allowance system and how to do it. Information on common problems and ideas of how to fix them.
Kids love money, it's a fact of life. From little children in love with pennies, to teenagers who only want the "green stuff", kids know that money brings buying power. It's up to you to teach them how to use that buying power responsibly. A good way to start teaching the value of money is by setting up an allowance system. You can start giving your child an allowance at any age, but age 7 is generally the best. This is the age when children really start to understand the concept of money and that it can help them get what they want by saving up for it. It's also a good way to help teach your child about responsibility.
Some quick pros for giving an allowance:
· Children learn to be responsible for their own money, if they lose it or spend foolishly they have to deal with the consequences themselves.
· Children learn the value of money, and appreciate it more.
· Children learn to work for what they want.
· Parents don't have to worry about being constantly asked to buy things for the kids (once the kids realize it is their choice if they want to purchase something or not)
· Children learn how and why to save money.
Some quick cons for giving an allowance.
· Kids may still want parents to buy things for them.
· Kids will complain that their allowance isn't enough.
· Kids will say it takes too long to save the money for what they want to buy.
· Kids may lose their money.
· Kids may spend it in ways the parents wish they wouldn't.
The first step in setting a child up on an allowance system is to sit down and explain what you are doing. Most kids will be thrilled to learn that they are about to be trusted with their very own money. For some the first question will be, "How much?" Here is a guideline to help you decide a weekly allowance:
· Age 6 - 8 $2
· Age 9 -11 $4
· Age 12 - 13 $5
· Age 14 - 15 $7.50
· Age 16 - 17 $10
Once again, this is only a guideline, you need to take into consideration how many children you have and your income besides - don't go broke making sure the kids get their allowance for the week!
Parents often wonder if allowance should be tied to chores. The experts of course vary on their answers. Some say yes because it teaches children they need to work to earn money. Others say no because it teaches children the only reason to work is to earn money and then they won't want to do "free" chores. A third set say to do both. Let the children know that their allowance and their regular chores are not related, however by doing extra things, they can earn extra money.
You may also want to consider setting up a savings account for your child and requiring that a part of their allowance be deposited every week. Teach them the value of saving by making sure the required percentage or amount is taken right off the top, and NOT after other purchases are made. Show them that savings is a priority, not an after thought.
When your child wants an increase in allowance, make them work for it! Tell them in order to get an increase they will need to come up with an amount, and good reasons why it should be increased - not just because they want a new bike and it's taking too long to save for it. Let them know you will take their thoughts into consideration, and then make sure you do. This encourages your child to not only think about just money, but to look at the world and see how others get raises, learn about inflation, and the concept of supply and demand. Receiving an allowance can be a real lesson in economics for your child.
