The Benefits of Giving Allowance to Your Children

When To Give Your Kids an Allowance

If you have kids, it might surprise you to know that children as young as five years old can be ready to learn about saving and spending.

One of the most vital financial skills that you should have is money management. Hence, the sooner you learn it, the better it will be for security of your financial future. A good way to begin teaching your children the skills of budgeting, spending, and saving is by giving them an allowance. This should however be done with the intent of achieving something more than just money management.

When parents know the reasons behind giving an allowance to their children and when they do so with specific goals in mind, it can assist the kids to begin and develop a positive relationship with cash.

When children get an allowance they begin to recognize the ways in which money works and offers them varied opportunities to learn and apply different financial approaches for a better future.

Many experts have stated that children should first get to know about the likely outcomes of money as well as understand that earning it is the only method to get money. Also, parents should attach allowances for kids to chores. Doing so will allow the kids to know the manner in which cash is earned. Parents also need to diligently coach their children on when/where to save and spend their money. Doing so during the formative years of children will allow them to fruitfully commence on management of money and budgeting.

It is important for parents to remember that kids and teens do not automatically warrant an allowance. But, by attaching allowance to chores parents can begin educating them about money and finances as well as prevent their children from developing a sense of privilege or entitlement. Allowances can easily be used as a method to begin a discussion with your children about money management which can of great help to their financial health later when they grow into adults.

It may also be noted that varied studies have shown that children who received allowances for chores done by them tended to do better at school in financial subjects as compared to children who did not receive any money or allowance for chores done by them. Also, children who had discussions about money and finances with their parents tended to perform better in finance subjects at school as compared to kids who did not have any finance conversations with their parents. It can thus be said that discussions about money management and budgeting with kids has a bigger and better impact on children with regards to finances, rather than just offering children an allowance for chores done.

Parents can begin the process of giving an allowance to their children as soon as they are able to do age-suitable chores and can comprehend the mechanism of buying goods with money. If parents feel that their kids have knowledge of the above two concepts when they turn 5 or 6 years old, they can begin teaching them the processes of earning money and efficiently dividing the earned cash between spending, charity, and savings, etc.

Allowance Mistakes To Avoid

• Giving Them Too Much
• Not Teaching Them To Be Responsible for Purchases
• Setting a Bad Example
• Not Talking About Money

References:

• https://www.consumerfinance.gov/about-us/blog/heres-why-childhood-is-an-important-time-to-learn-about-money/
• https://money.usnews.com/money/personal-finance/family-finance/articles/the-pros-and-cons-of-giving-your-kids-an-allowance
• https://www.psychologytoday.com/us/blog/good-thinking/201309/should-you-give-your-kids-allowance

Last updated on 2021-12-30