4 Reasons you Should Give Your Child an Allowance
We all have different relationships with money, and more than likely, it is based on how we learned about money as we grew up. I have never met a parent who didn’t want their child to have a healthy relationship with money. But how do we as parents set that up? How do we teach children lessons about something that so many adults still struggle with? I believe one-way parents can impact their child’s relationship with money is to give an allowance. I know many people approach allowances in many different ways, and a quick blog or Pinterest search can help you review some techniques that allowances have worked for some families. Below are the reasons that giving an allowance to your child is an important choice to consider:
- Giving an allowance teaches your child about saving vs. spending. Providing your child with the ability to save and spend as they see fit with their own funds will give them the opportunity to make mistakes. Buyer’s remorse is a powerful teacher. Let them learn with an $8 watch as a kid vs. a $40,000 car as an adult.
- Giving an allowance teaches your children the responsibility of work and money. Some families don’t tie allowance to work. In our house we do. Extra money can be earned for work above and beyond what our contract for the allowance states, but it is important to me for my children to learn that you have to put work in order to be compensated.
- Giving an allowance makes your child consider purchases. I can’t think of a better way to teach wants vs. needs that by having your child in a position to buy or save for things they want. We as parents are meeting their needs so when you get the “aw man that’s not fair” comment when you don’t buy them something, it is nice to come back with “well you can use your money to buy it.” Things that make your child go hmmmmm.
- Giving an allowance teaches financial literacy. What does it mean to go into debt? What does it mean to budget? What does interest mean? What is a loan? When you give an allowance, you open up the possibility for conversations where these things can be discussed and explored. The concept of money becomes a part of their lives early on.
It can be easy for a young child to believe that money does grow on trees if they don’t have a sense of what it takes to work for it or to save up for a more expensive purchase. Giving your child an allowance and talking them through the points above can create the beginnings of a positive relationship with money for your child.