Too many teens and adults are going through life without ever having learned financial responsibility. This can lead to mountains of credit card debt and long years paying off loans that could have been avoided if they knew how to manage money from an early age.
If you want to avoid this from happening to your children, start teaching them about money early. One way to do this is with their allowance. They will understand that working hard is where their allowance comes from, along with what it means to save money and how to be responsible with it.
When to Give Your Child an Allowance
A good time to start giving an allowance and teaching your children about money is when they’re old enough to count. Start early and teach your kids to count with play money, including dollar bills and loose change. Get them into the habit of counting the change when you get home from the store. This is great practice for when they get a grasp of money and you start giving an allowance.
How Allowance Helps Kids Learn About Money
There are a variety of ways in which giving your kids an allowance teaches them about money and financial responsibility. For one thing, they’re going to get practice in counting money, which is good for younger children. As they get older, they’ll understand that the work they do, such as their chores and homework, will be the only way they get the allowance.
Furthermore, your children will start understanding the importance of saving money. If they want an expensive toy, have them save their allowance and buy it themselves. A good way to get kids thinking about interest rates and debt from a young age is to explain to them that whatever they save towards a particular item you’ll contribute the same amount. If they want it right away, reduce their allowance by more than the item would cost overall.
When to Give Allowance
The time when your kids get an allowance and what they’re rewarded for depends on the parent. Some parents believe allowance shouldn’t be combined with household chores, thinking kids should do the chores regardless of getting paid for them. Others like teaching their children that hard work equals allowance (and a paycheck later on).
If you’d rather not combine them, have kids do additional chores to get an allowance, like shoveling snow in the front of your house. Either way, use allowance to show your child that regardless of what occupation they plan to have, working hard for your money is important. All types of professionals work hard for a paycheck, ranging from accountants to street sweepers to plumbers.
It’s never too early to start teaching financial skills, and it can make a big difference later on to your child.