When it comes to children, one of the myriad goals in raising them is to teach them enough about money that they are able to become financially independent once they reach adulthood. Many adults relate that their own problems with finances and budgeting stem from never really being taught when they were young the intricacies of having a healthy relationship with money. Therefore, in the interest of creating better fiscally informed future generations, read on for some tips on where to start with your own offspring while they’re still young:
WORK OUT THE DETAILS: Generally, a good guideline is $0.50 to $1 for every year (up to around the age of 12) per week: if Bobby is eight years old, $4 – $8 per week is reasonable. This might seem like a lot, but consider that you’ll probably want to encourage your child to have a few areas for which to budget their allowance: a portion to be saved (for a coveted toy or outing), some to be spent (like lunch money or bus fare), and some for others (such as gift-giving or charity).
NEGOTIATE CHORES: Sit down with your kiddo and decide on some age-appropriate chores. Work out which tasks will be mandatory and which can be done to earn spending money in addition to their allowance. This will give them the opportunity to put in extra effort towards items they want to save up for – great for goal setting – as well as teach them the value of work itself!
SET BOUNDARIES: While children are learning to budget and earn their pocket money, it’s important for both you and them to stick with the amount decided upon. It might be tough to keep quiet while Little Precious blows her money impulsively – when you know it will mean she’ll be short on funds later in the week – but this is how she’ll learn. Allowing the inevitable consequences to play out will help your child’s cash savviness much more than you reaching into your wallet week after week.
When creating your family’s allowance system keep in mind what it is that you are ultimately hoping to teach your little one about money management. Being honest and open about your family’s budget and life’s realistic expenses will also help kids understand this important life skill; they have to figure out eventually that, unfortunately, money growing on trees is the stuff of fairy tales!
If you find your debts exceeding your own “allowance” please contact us to arrange a free confidential consultation to discuss available debt resolution options.