Dad, mum I need a raise in my allowance.
Does this sound familiar to you? Is your child finishing the weekly allowance way before the week is over? Does your child really need an allowance? What is the importance of giving your child an allowance? What are the values that you want to instill in your child by giving him or her a weekly or monthly allowance?
Children need to be taught to manage their money from an early age. They need to learn to not only spend their money wisely but also to save a part of it. You have to teach your child early in life that money saved is money earned. You have to teach your child that valuable lesson in budgeting. Your child needs to be taught how to prepare a budget and how money must be spent.
Teaching your child to create a budget is a very useful strategy that you can use. Explain to your child that a budget is a plan to save and spend money. Help your child prepare a list of all the things that the allowance is meant to be spent on. He doesn’t have to spend all of it but must keep some aside. He can spend a part of the allowance on friends, clothes, entertainment, etc or whatever agreed upon between the child and the parents. He has to save another part for something valuable that he may require in the future or for a rainy day.
Never rescue your child’s overspending with more money. This can lead to a bad habit which can result in making the child indebt in the future.
Your child will certainly benefit from the money management skills that you will teach. The habits instilled in the child from early age tend to stay longer with the child. Teaching your child financial responsibility can be a fun-filled and exciting experience if you use the correct approach.
Specify to your child that the allowance is the amount of money that you give to your child weekly or monthly to spend on his necessities as he or she desires. Allowance teaches a child many important essential lessons such as saving, planning, sharing, decision-making, etc. Allowance helps your child develop an independent thought. The amount of allowance that you give to your child depends on your lifestyle and your child’s age.
Children need to spend time with their families in making financial decisions, in understanding the value of money and allowances. Allowances should definitely come with a set of rules and regulations: homework on time, chores to be done, good report cards, etc. Negligence in any area should definitely result in cut in their allowance.
Thus you can help your child to learn the value of money. Parents are the best teachers who can make their child learn the importance of money management at an early age. It is the parents from whom the children usually learn to manage their money. If parents are consistent they can give their child immeasurable rewards which will benefit their kids for the rest of their lives.