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Thursday, January 16, 2014

Four different ways to give your kids an allowance

Children and finance
Financial education is an important part of parenting

It has been determined by many financial professionals that teaching your kids about money at a young age can be very beneficial. One of the best ways that parents can start teaching about smart finances early on is by implementing an allowance. Not only can an allowance teach your kids the importance of saving and hard work, but you can also help them understand your own personal financial opinions and teach them how the math that they are learning in school applies to their everyday lives. While there are countless ways that parents choose to pay an allowance to their children, here are four methods that you can implement in your own home.

No allowance

There are many parents that believe that you do not have to pay your kids an allowance in order to teach them how to be smart with their money. These parents often suggest that being a part of the family requires that you do chores, without the promise of being paid afterwards. Instead of teaching kids to only work when there is an incentive involved, these parents suggest that they instead focus on teaching their kids to work hard to matter what they will get in return.

Allowance with guidance

The next method of allowance implementation includes a weekly sum given to each child, with some rules and regulations that must be followed with the distribution of funds. Some parents require that their kids save a certain portion or give a percentage to charity, while others ask that their kids use that money to help pay for some of the luxuries they are given by their parents, such as cell phones. This method can help kids learn about the importance of distributing their money and putting it to use for the good of others. Setting up accounts that monitor spending like a prepaid debit card from Spendsmartcard.com empower your kids while leaving you in control.

Payment for chores

In many families, allowances are not a guarantee each week. In order for children to earn their allowance, they are required to complete chores or other household tasks. Instead of giving each child a pre-determined amount, these parents encourage their kids to work in order to get paid – just like in the real world. While to some this may seem like bribery, the parents who implement this method feel as though they are teaching their kids that when they want something, they have to put in the effort to earn it.

Free-form allowance

As children age, many parents find that it is easier to come to a more basic agreement with their teenagers. Instead of telling their kids how and where they can spend their allowance or requiring that they perform certain tasks in order to earn that money, these parents typically give their kids a certain amount each week with the understanding that their teen will do the school work that needs to be done and will save their money for things that they really want or need. This type of allowance is a good way to gauge how well they have learned from previous methods of allowance. As your children get older, hopefully you will have instilled the value of a dollar upon them so that you can trust how they will handle money that is more freely given.

Presented by SpendSmart

Image licenses: Ken Teegardin, CC BY-SA 2.0

1 comment:

  1. We give our kids allowance. Each week, they are entitled to $1/year of age. But they have to do well on the weekly score sheet. We have a list of responsibilities, and each day I check off if they have been done or not. For instance, there are 4 things they have to do to prepare for bedtime without dilly-dallying. There are three things they have to do when entering the house. Many responsibilities are not on the list, because they are already doing them well. The allowance list is just to encourage them in areas we have identified as “next steps” that need improvement.