Parents, Do You Believe in Giving Your Child an Allowance?

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An allowance is useful tool in terms of both teaching kids how to save and budget and basically the value of a dollar from money earned and money spent. The value of an allowance is also useful in that it provides kids the opportunity to make their own choices and exercise some independence from their parents, while they are still living with their parents, who can offer guidance when they make mistakes.

• For younger children (under 12), an allowance can show them the cost of the little trinkets they want here and there, or the price of what used to be called penny candy. An allowance for this age group provides parents the chance to say “Did you bring your allowance to pay for that?” When they are asked to buy whatever plastic toy is directly in front of them at that moment in the checkout lane.

• For older children, larger allowances come with more responsibility and bigger chores. Movies, extra clothes, weekly smoothies, Starbucks; all those things can be saved for and spent on, when a teen or preteen gets an allowance and has to budget and make choices. They are forced to ask “Do I want that smoothie now or a movie this weekend?” It’s called delaying gratification. Kids are better off learning that lesson younger and earlier in life, rather than after college when everything has been paid for.

• When it comes to learning, although parents making all the budget decisions maybe use less time and oversight,  it is often a less effective way of teaching kids the value of a dollar. Kids learn from mistakes. Once they blow their dough a few times on frivolous items like candy or their friends’ requests or video games, they will learn lessons that cannot be learned when parents do all the budgeting and decision making.

• An allowance is money and money talks as well as teaches. Giving an allowance a way to teach wisdom that goes beyond what parents can share by talking.

 

Parent Tips:

• For preschoolers, introduce them to money, and as part of learning amounts, expose them to different currencies. They can begin to have piggy bank to save coins in.

• For elementary age, open a youth savings account where they can put gift money and other money they accumulate. It’s a good time to start an allowance and teach about interest and saving.

• For pre-teenaged children, 9 through 12, begin to allow them to spend independently, such as going into town on their bike and buying at Dunkin’ Donuts or saving up for a special purchase or a contribution to those extra-pricey sneakers. This empowers them and allows them to feel important in their decisions and contributions and that they have impacted the outcome. If they have goals of saving for something large, help them budget and calculate savings versus costs.

• For teenagers, it’s important to teach them about living on a weekly budget as opposed to saving up for one special thing as when they were younger. If your teen has a job, parents can co-sign for a credit card, allowing them to experience credit first hand. Debit cards allow responsibility as well. Parents can sometimes match amounts saved as an incentive for teens to continue to save, rather than spend.

 

Kate Roberts, Ph.D., is a child and school psychologist, couples counselor, parenting coach, and relationship expert, with 25 years’ experience. In addition to her professional training and extensive practice, Dr. Roberts’ wisdom is based in her life experience as a second wife, mother, stepmother, and co-parent. She shares her unique and highly qualified perspective in her practice, in the media, and in blogs for The Huffington Post and Psychology Today.

 

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Updated on 1.10.14