Teaching kids to manage their allowance

Children learn about money when parents provide opportunities while playing board games, or through creative play. Indirect learning comes when the child sees how parents spend money and observes nonverbal cues regarding their attitudes about money. Many families provide an allowance to a child, which is not dependent upon completion of household chores, but can be a valuable tool for teaching money management. Kids can still be expected to perform tasks around the house or yard without pay so that the child learns what it means to be a productive, responsible member of the family.

The allowance can be given without restrictions. Part of the learning comes when children choose between purchases and realize they can’t have everything right way. The may choose to save all or part of their allowance over time to make a larger purchase. In any event, the allowance should be paid consistently, at the beginning or middle of each week. With regular payment, children will learn trust, while also learning to hold onto money and promote the act of saving, rather than running right out to spend the money as soon as it is received on a Saturday morning.

Help your kids set goals for using their allowance, for saving it, and for contributing to others. Children will begin to see the value of helping others when they share their own money for a cause they choose. Learning consequences will come when children lose their money or are disappointed with a purchase they make. Resist the natural parental urge to bail them out. You are giving them more by allowing then to learn this way. You can talk about how they feel about their poor decision and what they will do the “next time” to prevent the same mistake. Discussing money with children is important so they understand the subject is not taboo.