Starting Kids on an Allowance: What the Latest Parenting Wisdom Recommends

Disappointingly, recent evidence suggests that we are not doing nearly enough to teach our children about money. Studies have revealed that children who had a weekly allowance from a young age exhibited more frugal decision-making compared with those who didn’t1.

However, a lot of our predisposed ideas about teaching our kids how to value money are actually misguided. Here are some dos and don’ts, and the rationale according to researchers, psychologists, and of course, parents.

Don’t link an allowance to chores. There are a couple of problems with household tasks being tied to an allowance, the big one being that you don’t get an allowance for housework, and once children earn their desired amount, they have lost their incentive. Chores are just part of the business of living. Allowance is for financial practice.

Do find a metric that works for you. Some families look at their budget and base the allowance on a portion of that. Others give their child a dollar a year, with a raise happening automatically on each birthday. This also avoids the conversation about arbitrary raises.

Don’t cave. Resist the temptation to treat your kids to extra stuff. You undercut the value of earning, saving, and spending if you don’t facilitate decision-making. If they test the fence, you can tell them honestly, “That’s not in my budget.”

Do set up guidelines as to how to manage money. Many families have had great success with the three jar system: one for saving, one for spending, and one for sharing. Create a caveat for what your children buy to curb pellet gun purchases. Splurging is fine provided they planned for it.

Don’t start too late. Moms have found that when the first teeth are lost is the perfect time to introduce kids to the world of finance: they get a little carrot, understand how they can use it, and they want more. Around five or six is a great age because they are also learning beginning math.

Do let them short-term borrow and pay you back. You happen to be out and your child gives you the hard sell about something he or she wants. You can loan the money and sign the child’s name to the receipt so that when you get home, he or she can pay you back. This is an excellent way to show how lending works.

We can in fact instill good financial understanding and habits if we start our children early, stick to our own rules, and let them fail a little – make some not-so great choices with their capital. If we are assertive now with money skills, that is something they can take to the bank for life.

 

 

  1. https://www.psychologytoday.com/blog/good-thinking/201309/should-you-give-your-kids-allowance

About Susie Almaneih

Susie Almaneih spent several years during her young adulthood teaching children dance at her church group, as well as other cultural-based activities. Susie now spends as much time as she can giving back to the families in her community. Over the years, this love for community has evolved into a deeper love for delivering positive and creative content and awareness to families of all ages.

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