The question of whether allowances are right or wrong is one that has been debated for generations. Now it's your turn as a parent to decide if an allowance is the best way to teach your child about financial responsibility. There are many reasons why regular payments to a child should or should not be made - ultimately I believe there is no right answer, it is up to each individual family to decide what is best for them. In my many years of working with parents and educators, these are the top seven reasons I keep hearing when asked why children should receive allowances.
1. They learn to be wise in how they spend their money. It can help teach them how to prioritize their spending and learn from an early age what things are a waste of money.
2. They learn how to save money. Having a regular amount of money can make it easier for them to develop good savings habits as a percentage of the money from each payment can be placed in a savings account/piggy bank. Without the allowance, any money they receive can simply be spent, with nothing going into savings.
3. They learn how to donate their money. A percentage of their money can also be allocated to donations to the needy, hopefully encouraging your child to be more considerate of others and not be greedy with their money.
4. They learn how to budget their money so that it lasts between payments. Eventually, most children learn to be careful how they spend the limited money they have so they don't run out of money. This will only happen if the parent doesn't give in to the initial whining for more money the first time a mistake is made!
5. They can learn to make mistakes with small amounts of money. Children will learn how to manage their finances responsibly much faster by allowing them to make mistakes (and suffer the consequences) than by someone else telling them how they should manage their money. Parents must be present to guide their children on how to spend their money, but not to dictate (unless their mistakes could have serious consequences).
6. They can stop nagging you about money. The idea is that if they get a regular amount of money and have a good understanding of how to budget it, they'll never run out of money, so they won't be pestering you for more. Realistically, it will probably never completely stop mining money, but it should limit it.
7. You may earn less money. When you sit down and add up how much money you give your child during the week and how much you spend on things for them (like clothes), it might actually be cheaper to give them an allowance and make them responsible for a lot of their shopping.
As I mentioned earlier, allowance is not necessarily the best option for every family, but these are some of the reasons why many parents and educators believe allowance is the only way to go. However, some families may not have enough room in the family budget to pay their children regularly, or simply do not believe in it for personal reasons. Whichever you choose, I've seen first-hand kids on both sides of the fence grow up to be exceptional financial managers, and kids who seem to have no idea. Ultimately, it depends on how much the child receives from their parents/guardians in terms of money - whether through an allowance or not.
You must be logged in to post a comment.