Parents, in showing responsibility are often forces to give their children certain money as allowances. It is actually a smart idea as they begin to learn financial responsibility at a tender age. While there is little debate on the instance of giving children allowances, the crux of the argument is in determining just how much should be given as allowance children. Many parents are even of the idea that allowance should be earned by the children, and not just given to them.
Determining how much is reasonable enough as allowance depends on what you expect the children to do with the funds. If the allowance is provided for snacks, then it does not need to be much. Keep in mind that any amount you decide to give your kid should be in the range that such child will be capable of handling. There is no benefit in allocating an amount that the child already knows what to spend it on even before receiving it. Let them understand that the essence of providing an allowance for them is not simply to spend it, but to teach them valuable finance skills.
Many factors determine how much a kid should be given as allowance;
- the child’s age
- the parent’s income
- where the family lives
- the allowance range other parents are given the child’s peer, and
- What the allowance is supposed to be used for.
Whether you see allowance as what should be earned or what should be provided to teach children about financial prudence, you be aware of the following:
- Don’t start late
Many parents find it hard to give their children an allowance as late as 8 years of age. This has been confirmed as a serious mistake. It is important to start giving your kids allowances as soon as they grasp the concept. From age five, they begin to count money just as they are mastering counting numbers. They will grow appreciating the value of money and the importance of savings.
- Tying all the Allowances to chores
Another serious mistake is making your child work for their allowance. While it sounds ideal, don’t let money be the motivation to engage in house chores. They should understand that chores are the responsibilities of every person in the family. You can encourage then once in a while with a little token when they do house chores but it should not be too frequent.
- Giving extra money
If you want to teach your kids true financial prudence, ensure that you don’t give them extra money outside what has been given to them as allowances. They should be able to be financially responsible by operating within the budget that their allowances offer them.
- Giving with no strings attached
When giving your kids allowance, ensure that they understand the reason for such actions. Let them know what and what the allowances are supposed to take care of. If possible, teach them to develop the habit of saving money for items that they want by delaying gratification. Teaching them to save a certain percentage from any allowance is a great way of preparing them for the future.