An allowance can be a fun, effective way of teaching your children about money management from a young age. If organized right, your kids will learn that money is earned rather than appearing magically, and that saving and budgeting will help them in the long-term. Here are a few quick tips for making an allowance system work for your family:
- Encourage saving early on
When you hand over the allowance, talk to your children about the important of putting some aside to save up for something special. If they have a particular toy they’ve been hankering for or a game they want to buy, show them how long it will take them to reach their goal if they put aside a certain amount each week. They’ll get a real satisfaction out of saving up to buy the item themselves, and will learn something important in the process.
- Make the allowance conditional
Be sure that the money doesn’t just appear every week regardless of behaviour. You can increase or decrease the amount received depending on how your child has behaved over the week, and whether or not they’ve completed their allocated chores around the house.
- Encourage philanthropy
A great way of teaching your kids about giving to others is to let them pick a charity of their choice, and then agree to donate a particular percentage of their allowance every week. Help your child find a charity that relates to something they’re passionate about, such as an animal rescue if they love pets.
- Negotiate if they ask for more
It’s pretty inevitable that at some point, your child will want a little extra, especially as they get older. Although you have the right to say no off the bat, particularly if they haven’t been behaving well, it can be worth sitting and having a mature conversation about what they would use the extra money for, and ways in which they could earn it around the house. If there are no extra chores that need doing, encourage them to look at other ways of raising cash for themselves, like through selling old clothes or toys or having a bake sale in the neighbourhood.