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Giving your children an allowance can teach them important lessons about money, such as how to save for large purchases and how to follow a budget. The rules that you establish for giving kids an allowance, however, can affect the lessons that they learn.
Follow these three easy, essential rules to make sure your kids are prepared to handle money wisely once they reach adulthood.
Most children don’t truly understand the value of money until they reach junior high school. Introducing them to basic financial concepts at a young age, however, gets them accustomed to using money sparingly. Even though young children may not fully comprehend the lessons they learn from budgeting, they will develop habits that benefit them later in life.
Experts typically agree that parents should start giving their children allowances between five and seven years old.
Deciding how much money you give your kids can get a little tricky. You don’t want to give them so much money that they don’t learn anything about saving. On the other hand, an amount that’s too small can make saving feel like an impossible task.
Many people suggest giving kids $1 per week for each year they’ve been alive. A seven-year-old, therefore, would get $7 per week while a 15-year-old would receive $15 per week.
By following this simple rule, you increase the amount of money that your kids receive as they mature and become responsible for more of their expenses.
You almost certainly don’t expect your children to rely solely on their allowances. Nearly all parents still pay for essential items such as clothing and school lunches. Parents might, however, insist that their kids pay for non-essential items like video games, apps and candy.
What your family considers essential may differ from what other families think, so it’s important for you to clearly define your expectations. Without clear rules, children may become confused about the purpose of their allowances.
You also need to make sure that you stay consistent once you set your expectations. If you let your kid convince you to buy an app “just one time,” you could undermine the lessons that an allowance is supposed to teach.
Giving your kids an allowance doesn’t have to become a stressful event. As long as you follow a few basic rules, you can teach them the fundamentals of using money. In the long run, your children will benefit greatly from these crucial lessons.