By Rachel Incoll
The question of whether allowances are right or wrong, is one that has been argued for many generations. Now it’s your turn, as a parent, to decide whether or not an allowance is the best way to educate your child about financial responsibility. There are many reasons given on why a regular payment of money to a child should or shouldn’t be done – ultimately I believe there is no right answer, it is up to each individual family to decide what is the best option for them. Through many years of working with parents and educators, these are the top seven reasons I keep hearing on the question of why should kids get allowances.
1. They learn to be wise with how they spend their money. It may help to teach them how to prioritise their spending, & learn from an early age what things are a waste of money. 2. They learn how to save money. Having a regular amount of money, may make it easier for them to establish good saving habits, as a certain percentage of the money from each payment can be placed into a savings account/piggy bank. Without an allowance, any money they receive, may simply be spent, with nothing going to savings. 3. They learn how to donate their money. A certain percentage of their money can also be allocated to donations to the needy, hopefully encouraging your child to be more thoughtful of others, & not greedy with their money.
4. They will learn how to budget their money so it lasts between payments. Eventually, most children will learn to be careful how they spend what limited money they have, so they don’t run out of money. This will only happen, if the parent doesn’t give in to the initial whining for more money when the mistake is first made! 5. They can learn to make mistakes with small amounts of money. Kids will learn how to manage their finances responsibly far quicker through being allowed to make mistakes themselves (and suffering the consequences), rather than being told how they should be managing their money by someone else. Parents need to be there to guide their children on how they should spend their money, but not dictate (unless there could be serious consequences from their mistakes).
6. They may stop nagging you for money. The idea is, if they are receiving a regular amount of money, and they have a good understanding of how to budget it then they will never run out of money, so won’t keep pestering you for more. Realistically, it will probably never put a complete end to the nagging for money, but it should reduce it.
7. You may end up forking out less money. If you sit down, and add up how much money you give your child during the week & how much you spend on items for them (e.g. clothing), it may actually work out cheaper to give them an allowance, and make them responsible for a lot of their purchases.
As I mentioned earlier, an allowance isn’t necessarily the best option for every family, but these are some of the reasons why many parents & educators believe an allowance is the only way to go. Some families though, may not have enough room in the family budget to provide their children with a regular payment, or may simply not believe in it for their own personal reasons. Either way you choose, I have seen with my own eyes, children from each side of the fence who have grown up to be exceptional money managers, and likewise children who seem to have no idea. Ultimately, it comes down to how much guidance a child receives from their parents/guardians on money – whether through an allowance or not.
Rachel Incoll is the author of Kids Money Tips. She has helped show thousands of parents how they can teach their children everything they need to know about money in just a few simple steps. Visit her site http://www.kidsmoneytips.com to find out how your child can learn to save & manage their money more effectively with great, printable money charts, fun worksheets, play money and more.
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By Rachel Incoll