Many experts suggest that the best way to make sure your children have a solid grasp of money is to start them with an allowance in kindergarten. Some parents start with a fixed amount of money, and raise it a little bit every year. With young children, most parents will allow them to save the allowance for items that the children want. By learning to save up for a particular toy or book, the child will learn the fundamentals of budgeting their finances. They learn that it may take time to save up for something they really want.For older children, when deciding on how much allowance is appropriate, parents should examine what the children are expected to pay for with their own money. If children are expected to pay for school meals, clothes and weekend entertainment, then these costs should be figured into the amount of the allowance. By working together to come to an understanding of just how much is needed for expenses, children will learn to be responsible with their money.
The majority of experts agree that the allowance should not be tied to chores that children are expected to do around the home. They stress that children should have assigned chores at home so that they learn responsibility from an early age. Tying allowance to chores may result in arguments, as well as chores that are left undone if the child decides to forego their allowance in order to avoid doing chores they may find boring. Household chores should be divided between all members of the household fairly, taking into account ages and abilities.
There are exceptions to the rule about not tying allowance to chores, however. If there are large jobs that need to be done periodically, such as mowing the lawn or cleaning out the garage, then a set rate should be established for the job and paid upon its completion.
One thing to remember when teaching children to be financially responsible is that it is important to let them learn to make their own decisions. If a child wants to spend their money on a toy or article of clothing, then it is their choice as long as it is safe. Once their allowance is gone, they will have to wait until they get more in order to purchase anything else. Parents should not give in and buy other items the children want once they have spent their allowance.
It is good to teach your children early on about saving money instead of just spending it as soon as they have cash in hand. One of the best ways to help children learn about saving money is to open a bank account in their name, or in both of your names. This way they can add money periodically and watch their savings grow. Many parents encourage their children to save some of their money, donate a percentage of their money to a charity and then spend the remainder. By doing all three, children learn to save and budget their money, while at the same time they learn the importance of helping others.
Children will learn the basics of finances by observing how their parents handle the family budget. If parents strive to save for the future, children will grow up feeling that it is important to plan ahead and have money saved for emergencies that might arise. In many parts of the world, credit cards are being offered to students in high school, so it is vital that they learn how to handle their finances well so that they do not fall into debt as adults.
As our children grow up, it is inevitable that they will want more things. By helping them to understand money from an early age, they will be more money-wise when they enter into their teen years. With a solid background in handling their money well, they will know the value of money, and saving. It’s up to parents to set a positive example that will hopefully help their children lead lives that are more financially stable and secure. Even if parents have not begun giving their children an allowance, it is never too late to start. Money matters are important at every age.
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