Now how do we make a children's allowance effective? I'm a parent and I have been nagged and hassled by my child to buy them the latest video game or toy. A lot of the times I just buy them what they want just so they'll stop bugging me. I'm thinking, I've given my child a weekly allowance already, what has he done with it, and why am I buying the items he wants?
Therefore I research more into this situation. I speak to my son about the children's allowance I give to him weekly? He tells me that he has already used in the school shop to buy candy and junk food everyday and by the end of the week, he has no more money to spend.
I then realized that I was only giving a kids allowance because all other parents were doing it and thought it was the right thing to do. As I looked into it further, I found that allowances for kids are given so they can understand what to do with their money in a responsible way. I think I have just missed the boat here completely by not giving any advice to my child on how to use his pocket money properly.
What I've done now is have weekly meetings in regards to allowances for kids. At the beginning of each week, we create a budget and allocate part of the money to saving and the other part to spending. I would recommend saving at least 10% of the pocket money.
Remember to always talk to your child about what they want to save up for so they have a goal in mind? If it's something that takes about ten weeks to save on 10% of savings allocated, you can advise them that if they want the skateboard quicker, they can put more of their pocket money into their savings account in the bank.
You can try this technique with allowances for kids and you will soon see your child heading towards saving more of their money so they can reach the amount they are striving for. Once they have reached this, they will feel more confident of what they have achieved then if you had bought it for them instead.
Another suggestion you could use is say to child if they save $100 in their savings account, you will match this amount as well. This will make them more inclined to save their money rather than spending it all.
If you can, try to always make a children's allowance fun so your child will learn about the different topics of money such as budgeting, allowances, saving money and making money. This will create great money habits for your child which will benefit greatly when they become adults and start their own family as well.