Are your children old enough to ask for (or demand) an allowance?
Many parents struggle with the concept of giving a weekly salary to their kids. After all, you are the one paying their rent, utilities, and grocery bills. Why would you have to pay them to live with you on top of that?
And who or what is introducing them to the idea of an allowance in the first place?
These questions will likely never find their answers. That's why we have created this handy guide on when and how you should give your kids an allowance!
Teaching Your Kids the Importance of Money
When your child is old enough to spend money, they need to learn what makes it so valuable. If they have yet to hold their own job, they likely have little understanding of what it took to earn each dollar they spend.
By giving them a specific amount once a weekly, bi-weekly, or monthly, you can structure their financial education. If your children are introduced to the real world without a proper knowledge of how money really works, they could make any number of mistakes. When you ask whether or not you should give your kids an allowance, this should be number one on your reasons why you should.
Benefits of an Allowance
Many kids can learn the value of a savings account (piggy bank-style) from an allowance. Such a saving habit can often carry over throughout their lives, teaching them proper financial planning skills and budgeting.
Beyond that, spending small amounts of money teaches basic math and economics skills, as well as social interactions. Your kids will recognize that the money they have (whether that is $5 or $50) only goes so far. And when they have to make careful decisions in their purchasing, they will better recognize why you have to do the same with the larger purchases in life.
When Not to Give an Allowance
- When you are already struggling to make ends meet each month.
- When you see that they are spending their allowance money frivolously.
- When you are worried that it creates an unhealthy association with money as their only motivation for doing things.
- When you are worried they are becoming spoiled.
Most of these points can be addressed by simply reducing the amount of money you choose to give them. You can explain that times are tough, or that they need to work harder to actually earn the allowance they receive. As a result, they may perform more tasks around the house or improve their grades at school.
Ultimately, granting an allowance for your children is not for every parent. But if you choose to do so, you can figure out a few great ways to incentivize them to act better overall, teach them the value of hard work, and instill long-lasting money management skills.
Want more tips and tricks every week? We love discussing a wide range of personal finance topics that both inform and entertain. Keep your eye on the Atlas Credit blog!