Strategies to Teach your Kids about Using Children's Allowance Efficiently

By Martin Campbell

An allowance for kids is a great way to learn about how to budget money. Parents usually take the time to answer questions and talk a bit about how money should be handled, but it is all theoretical without actual money to use that information on. A child will learn through experimenting and experience with their own money.

Knowing how to save money and being responsible with what is spent is a lesson many do not learn until well into adulthood. This is learned from being thrown into the fire of life by their parents and told now it is their turn to take care of their financial needs. Of course this leads to lots of calls for help until they get it.

Once a child is asking for money and shows an interest in spending their own money, it is time to consider giving them an allowance. The amount given can be determined by figuring out how much is issued to them for all the things they ask for each week. Another way to determine the amount is to match their age, a dollar per year.

Giving allowance in exchange for doing chores is not considered a good idea. Imagine a child deciding that since they got money for their birthday, they can afford to skip a week or two of chores. Chores are really a part of working together as a family to care for the home and should remain that way.

The child and their parents must discuss what the allowance is used to buy. In this way, they will know that if they spend all their money, they cannot come back to their parents and ask for anything that was agreed upon to be paid for with their money. Some guidance will need to be given as far as how much to spend, save or share.

Lessons of how to manage and budget cash are difficult at any age. Some adults work on it for years and still struggle. Allowance for kids will give children a way to make it all habit and make it more likely for them to do what is necessary automatically.

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