Tips on How to Educate your Kids about Utilizing Children’s Allowance Successfully
As a parent, no doubt you will want the best for your children. In the days of the global financial crisis, this is even more prevalent as you want to have enough money to be able to support your family. Now how do you ensure your children when they grow up and will probably face the same kid of financial challenges that we all experience now, will come out okay?
In life, there are no guarantees. Parents though can assist their kids in educating them about finances when things in the world don’t go according to plan.
Now how do you do that? Your best tool of initially educating them is by giving them an allowance!
Allowances are weekly/fortnightly/monthly payments to your child to give them financial flexibility.
Why do we give our children an allowance? The basic reason for this is to teach them how to save, how to budget and spending wisely. Most of all, we are educating them the vital tool of budgeting. If your children decide to use all their allowance on comic books or a packet of potato chips, then let them be. What you need to do as a parent is to communicate with them that there is more to allowance than just instant satisfaction. If could be saving for something bigger such as a new looking sweater.
Kids allowances teaches them the ability to save, therefore, to setup goals in the future which will benefit them more. It could be saving for college, buying a car, or even going on a holiday.
The one thing never to do though is to negate your kids allowances when they are naughty. I will explain this further…
When we give an allowance to our children, what we want to do is model to them what happens in real-life. Usually we get paid weekly (or fortnightly or monthly). So we get a consistent payment. We may have some bad weeks where we might not perform too well or get complaints from clients.
Kids are going to be bad and throw tantrums, but don’t use this reason to suspend their allowance. Use other methods to teach them a lesson instead.
When we give a kid allowance, we want them to be able to budget ahead, so if they are saving for a small holiday with their friends, it may take 10 weeks to save up for example. Let them do this so they are able to look ahead and plan accordingly.
Budgeting and saving are 2 important principles they will need to learn to be more successful with their finances later in the future.
At the end of the day, don’t be too strict on your children with allowances, make it fun, and always encourage them with what they can do with savings in the future.