Teaching Your Kids about Money and Allowance

8:38:00 PM Rhea Mocorro 0 Comments

Image from kidsinthehouse

Growing up with nothing much in my life most especially in terms of allowance taught me how difficult money is to obtain. Even more, my parents would just give me a very strict allowance per day. And this does not even cover much. But hey I can’t complain I managed.

Since the new school year has arrived, I bet many parents are now in the dilemma whether to give their kids an allowance. I am an advocate of giving them money. Yet, apart from giving them the money, we also need to teach them how to manage the money. Because if they often receive without proper intervention, it would grow in them to receive and receive. They will fail to realize the big responsibility associated with the money. Even more, these allowances can be a good tool to teach your kids about money.

Consistency

When giving allowances, it must be consistent. Giving them the regular amount would give them the chance to do what with the money. Even more, they would learn from their mistakes. Give it also consistently, be it a daily, weekly, monthly or bimonthly. However, should they already deplete their allowance before the next allowance cycle, don’t give them anymore. They won’t be learning if you would just replenish their allowance whenever they have none. Make sure your rules are not malleable so they can’t simply whine around.

Start with a Budget

It would be wise that you incorporate savings when giving every time to your kids. You might get a specific amount from it for his savings and another amount for tithes. For instance, if your kid’s weekly allowance is 500, before giving him the 500 you might want to get 50 pesos for savings and another amount for tithes. However, this must be done with the kid. Let him or her understand why you are getting those amounts. Even more, make him or her appreciate the gesture by showing his growing savings account or putting the money in a jar. This would be easier for them to grasp especially if they are little. You can also go to the bank together with the kid so he or she would understand the concept of banking. And even more, be there to teach him or her how to budget his money and make the most out of it.

Money and Chores

Some parents would say that the allowance amount would be dependent on the chores done by the kids. This would make them realize the value of hard work and money. While that is not a bad idea, helping around the house is basic responsibility for any family member. And as such that should not be compensated. In order to bridge allowance with chores I would suggest that they be given incentives if they happen to do things apart from the usual household chores. For instance, if the kid would offer to clean the car during the weekend, then negotiate a rate for that. Fixing his bed after waking up should not be a chore to be compensated. It is the kid’s responsibility to do that as a family member.

Give Just Enough

When giving allowances to the kids, consider first the family’s financial capability and cost of living. It is our intention to teach them the value of money coupled with delaying gratification and patience. Which is why, don’t give too much. Don’t give them that freedom to buy anything they would like in a whim. You would want them to scrimp and save in order to be able to buy what they want in time. If you are consistent to drive them and fetch them in school with their food baon, give them little, enough that they can be able to buy small items in the canteen. This would also depend on the kid’s age and the money demand. If your kid is in college, he or she would have a bigger allowance because of immediate school requirements. Increase it during your kid’s birthday so they would understand why the older siblings have more than the young ones.

This would definitely vary depending on the family’s circumstance. These are but basic endeavours to teach them how to manage their money at a very young age. Over time, they would be able to appreciate these lessons.


P.S To those doing the 52 Week Money Challenge, it is Week 24 already! Did you deposit the next amount yet?

P.P.S Want to know more about investing, savings, stock market and more, check out my reference here. You can download free ebooks and resources too. 

P.P.P.S I am also sharing my stock market secrets and information via these resources.

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