Many kids get an allowance-their first experience with earning money. Make sure to set a good example from the start by setting rules and teaching your children good financial habits that they can take with them into adulthood. Here are a few good tips to keep in mind:
Show them the importance of earning it
Make sure your kids clean their rooms, help with meals, wash dishes and/or perform other needed chores around the house so they make the connection between income and working for it.
Do not withhold allowance as punishment
The only time your child should not receive an allowance is if they fail to complete assigned chores. If you withhold or reduce allowance for misbehavior at home or school. it only serves to teach them that they can “pay a price” for bad behavior. The best strategy is to be consistent with an established allowance arrangement so that your child learns consistency in earning a wage.
Allow kids to earn based on age
As a general guideline, parents can follow a simple rule: Pay your child weekly the equivalent of their age. If your child is 10, he/she will receive $10 per week.
Don’t give advances
As adults, it’s not often that employers give advances on wages, so don’t teach your kids that being paid before work is completed is okay. If your child blows through their allowance, hold strong and make them wait until the next “pay day.”
Teach your kids to save
Help your kids understand the importance of saving money. Help them set up a bank account and explain why it’s smart to have money for a “rainy day.”
Giving your child an allowance is a smart way to teach them a strong work ethic, the value of money and the importance of saving for the future. Starting off by teaching strong financial habits will better ensure your kids are financially responsible throughout life.