They say that parenting is a great learning opportunity and one of the more practical applications for me has been establishing a weekly allowance for my daughter. I am notoriously dreadful with money, so keeping Daisy on point has not only taught her some lessons about finance, but has also taught me a valuable lesson on budgeting and saving. Here we have a few tips on how to get your kids, and perhaps you, on the right track of financial responsibility.
Set up a piggy bank at a young age. Kids get a sensory thrill from dropping money through the slots while experiencing the weight and texture of coins and paper money. Rolling coins is another fun activity to do with children, just make sure to wash the coins before you start.
Another way to teach young ones about budgeting is to set up a make believe store with a cash register and pretend money. Little ones love to role-play and imitate their caregivers and this is a great game to help teach real life skills.
Some parents divide money into save, spend, and give categories. Using three piggy banks is an effective method to helping kids distribute their money and watch their funds grow. This gives children a practical framework for a real life budget at an early age.
There are several ways to determine the going rate for an allowance. A general guide is to give $1 per year of age on a weekly basis. For instance, a 4 year old would earn $4 for a week and then graduate to $5 upon his or her 5th birthday. You can also give a flat rate if that makes more sense to you. Budgets vary, but you will want to ensure that they are able to get some of what they want, but not too much so that they learn the value of delayed gratification.
There are mixed sentiments about rewarding children for chores. While it can be an effective way to get the job done, it doesn’t guarantee long-term results as the novelty quickly wears off. Some argue that children should take ownership for their individual chores in order to be a participating part of the family. One way around this conundrum is to offer an extra incentive for chores that go above and beyond what is already expected on a day to day basis.
Giving children the opportunity to control where they spend their money instills a sense of responsibility and ownership. They place greater value on their possessions once they remember the effort that went into the acquisition. Remember, they will make mistakes and giving them the freedom to fail is part of the learning process. Hopefully they learn the value of money and have a leg up to navigate through a world that is increasingly running on debt.