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Tuesday, August 10, 2010

Tanya

5 Reasons To Give Your Child An Allowance

Between the time when your child learns to crawl and when they ask to borrow the car keys, you’re going to wrestle with the dilemma of giving them an allowance. There are pros and cons on both sides of this question. Here are five reasons why you might want to consider giving your child an allowance.

1. Dollar Power
They need to learn about money at some point so why not start them off on the right foot? The idea of exchanging a piece of colored paper for something on a store shelf seems like the most natural thing in the world to us but, for a child, this is a strange and alien concept. Starting them off with an allowance gives them first hand experience of what money is worth and what you can do with it.

2. A Penny Saved
With an allowance there’s also an opportunity to teach your child the importance of saving. You’ll be hard pressed to get them to save for ‘a rainy day’ as one of the first things they’ll pick up about money is how much fun it is to spend. However you can use that to demonstrate saving habits. If they’ve got their eyes on something one week’s allowance won’t buy, you can encourage them to save up over subsequent weeks until they’ve amassed the purchase price. This will also teach patience and perseverance: two qualities that will serve them well in adulthood.

3. Responsibility
You might want to start your child off with a job around the house rather than just opening your wallet once a week and handing money over. This is a good way to help your child as they begin their financial lives. With odd jobs around the house come responsibility and a very important cause and effect lesson your child needs to know if you hope to foster a strong work ethic. Getting something for nothing is not an idea you want to encourage as your child matures.

4. Budget
The ability to budget can come with getting an allowance but you can help steer your child in the right direction too. Whether on their own or with your help, once your child understands that they will receive a set amount once, and only once, per week, they’ll be motivated to make it last for the week and not spend it all in one massive spree. Dolling it out over the course of a month will teach them good spending habits.

5. Independence
An allowance also provides your child with their first taste of independence. With money in their tiny fist and a store full of things to buy, your child must choose for themselves what they are going to spend it on. Letting your child follow through with the entire transaction from selecting the item to handing the money to the cashier and receiving change will give him or her a sense of pride, accomplishment and ownership as they will have purchased what they want with ‘their own money.’


This article was written by Andrew Salmon from LifeCover.ca: a website that offers life insurance in Canada.

Tanya

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August 10, 2010 at 4:57 PM delete

Five excellent points/tips. You can also use an allowance to introduce your child to charitable giving. As they grow into the teen years, we've found it useful to give them a separate clothing budget/allowance and put them in charge of the purchases there - a great learning experience. We like to deliver the clothing allowance annually so they learn the discipline of managing a relatively large sum over a lengthy period of time (and the consequences of mismanaging it!). An online app like FamZoo (there are others too of course) makes this very simple for the parents to manage.

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