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Should your child be getting an allowance?

Allowance plays an important role in developing kids outlook towards money, savings and the ability to manage money. But not all children are ready for an allowance. One needs to assess the child’s needs and understanding first before starting a healthy allowance for him/her. Handling money is an issue which kids face today, and parents do not realise that it might effect the child in the latter years. Today most kids have a lot of money to spend, money given to them by working parents in order to make the child feel satisfied. But in this manner the child fails to realise the value of money. Parents should encourage good financial habits in their child from the early ages. Children should be given oppurtunity of tackling money and managing it and sometimes, earning their allowances. Parents should not nag or criticise their children about spending their allowance instead they should make some rules about allowances and stick to them or change according to the needs.

Let us now look at some of the criteria for giving an allowance to your child.

Understanding the concept of money

The very first rule is to see whether your child understands the concept of money or not. Experts suggest that by the age of 6 a child starts understanding about money. Till the age of five a child’s mathematical skills are not well developed. Thus, before the age of six make your child happy by praises and gifts for your child’s good conduct.

Allowance Rules

This is the most important and the most crucial part of deciding to give your child an allowance as once you start this stage, it will help the child to make all his/her future financial decisions. Parents must realise that this is an important learning stage in the life of their child and by merely giving him/her some money, the child will probably not gain anything from this exercise. This exercise should develop your child in such a manner so that they learn how to manage their own money.

Make them learn the value of hard-earned money. Set some achievable chores for your child and pay your child accordingly, if the work is completed on time and is done properly. Do not bribe your child here by saying things like eat your brussel sprouts and I will pay you money or if you finish your homework you will get paid, never bribe them in this manner. Instead, set out chores like cleaning up their own rooms, helping you clean the dishes, taking the dog out for a walk or taking out the garbage. This gives them a feeling that they have done something useful for the house and are getting paid for that.

Every family has different incomes. Allowances also depends on ones family income. Some can afford to give an allowance every week and some cannot. But one can set a weekly allowance rate for your child or one can set rates for different chores. Set a higher rate for some chores while a lesser rate for some. In this manner your child learns the concept of making a profit too.

Talking to your child about allowance

This is an important thing as talking helps you share knowledge about money with your child. Talk about savings to your child. Encourage them to save and ask them what they are going to do with the allowance that they get. You can give them ideas about how they should utilise their money, but make them feel that the allowance they have earned is their own money and they have the freedom to use it as they feel like. But as parents discuss the options with them. You can also encourage them to donate some money to the less fortunate children. This way they will definitely feel good and develop a sense of social well being too.

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