Using Children's Allowance To Teach Them Lessons On Saving And Responsibility

Allowance for kids is important because it is the only way to truly learn how to manage money as a child. The younger children are started and able to understand the concept, the better. Many times parent will discuss the topic and give some good advice but that is not the same as having to spend your own money.

The average adult learns all about managing money from the age of 18 or older, unless they had a job in high school. If that was parent subsidized then the lesson could not have been fully realized. It is not until mistakes are made and consequences felt that the lesson hits home.

A small child can learn a little about saving money and spending it. They may not immediately get the value but they do know the difference between having it and not having it and what they can buy with it. The amount of allowance they are given can match their age or the amount typically given during a week.

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.

There will need to be an agreement made about what their allowance is spent on. The idea is to minimize what it is they are asking their parents for and to learn to budget what they have. Make sure what they receive is enough to cover their purchases. As direction for managing what they have, go over saving money, spending money and sharing money. Be an example with this concept. They should spend on their agreed upon items, save for those that cost more and sharing through giving.

Allowance for kids is a great way to learn money management from a young age. Do not wait until they are teenagers to start instilling these habits. There are lots of adults that did not begin to learn until they were on their own and that is simply too late.