5 Reasons to Give your Kids an Allowance

To learn to ride a bike, you need a bike. And to learn to manage money, you need a little money. Allowances give kids room to make mistakes in a low-risk environment. By practicing with their own money, children get to try out concepts – saving for a rainy day, prioritizing goals, and delayed gratification – that might otherwise seem abstract or irrelevant. Here are some reasons to consider giving your child an allowance:

1. Teaching them about real life: Nothing beats an allowance for a hands-on course in values. Having their own money teaches them about responsibility, consequences, caving, and charity.
2. Builds trustworthiness: By giving kids money to manage, you demonstrate that you trust them. They will soon learn that to keep the money coming, they need to maintain your trust in them.
3. Distinguish needs from wants: Do they really need that new action figure? Having their own money makes kids think more critically about what they want to spend it on, especially if they need to complete chores to earn the allowance.
4. Puts an end to nickel-and-diming: If you create a budget items for yourself, where you can allot an amount of money for your child weekly or monthly, it can help slow the random flow of money from your pocket to theirs.
5. Promotes Self Sufficiency: Managing money can have a positive impact on their self-esteem. It can also teach tools of self-reliance since your child can now learn how to prioritize money, share with charity, and learn to save to work towards accomplishing a goal, even if that goal is a pair of new peace sign earrings.

Allowances are flexible. There are no set rules or requirements. When you start giving your child an allowance, how much you give them, how often they receive it, and what they have to do to earn the income is totally up to you as their parent. There is even room for you to negotiate the “terms” of the allowance with your child if you would like.