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Using Childrens Allowance To Teach Money Skills

Author : Ben Carper

One of the best tools that parents have available to teach their children money skills is the childrens allowance. While you should not use it to reinforce behavior, it can be helpful in teaching your child to be financial savvy. When used to reinforce behavior, it can backfire when the child decides it is not worth the money to have to do chores or do their homework or any other behavior you are trying to reward with money.

One question that many parents have is how to determine the right amount to give their child. Some think that 1 dollar per each year of age is fair, but others disagree. Not many 10 year old kids need $10 per week.

One way that some parents determine an amount is on a needs basis. By keeping track of your child's needs such as school lunches, supplies, and so on, along with their discretionary items such as candy, new toys, and items such as these, you can get a ball park idea of how much they spend. The next step is determining what you want them to take responsibility for. Then base the amount of their allowance on this figure.

For instance, if your child spends money on school lunches each week, expecting them to cover the cost themselves is okay to do. In this case you might give them an amount of $12 weekly and expect that $10 of it will be spent on lunches, leaving them $2 to spend or save for the non-essential items that they want.

This is an ideal lesson opportunity. It is important that you, as a parent, also hold your ground and do not give them extra money if they spend too much. This helps teach them how to budget and save money. It will also help them to decide what items are truly important to them.

Using your childrens allowance as a means to teach money management is only one of the important skills they will learn. It is an important way to get them started on the right foot financially.

Author's Resource Box

Derrick Janson is an expert in Teaching Kids About Money. He has taught about childrens allowance topics, budgeting, saving money and making money for kids.

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Tags:   allowance for kids

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Submitted : 2011-03-02    Word Count : 445    Times Viewed: 387