Financial Lessons Learned From An Allowance
As parents we are busy running kids back and forth to sports and music lessons, helping with homework, cooking, cleaning and taking care of a million other chores. It is easy to get through life without every explaining how to write a check, teaching our children about the importance of credit scores or giving them the tools they need to learn to pay bills on time.
But there are ways to work these lessons in as they grow and it may all start with an allowance.
It would be easy to hand our children money whenever they need it but it may be smarter to help them earn the money and learn how to save and manage it over time. Here are some easy lessons learned through receiving an allowance.
Hard Work Pays Off
Teaching our children the value of money is easier with an allowance. Assigning weekly jobs when they are as young as 5 may help your son or daughter learn the value of money. They may not enjoy emptying the dishwasher, setting the table or taking the trash down once a week, but when they get paid for it, they begin to understand more about real life.
An allowance may also teach children to take initiative. They may begin to ask for additional jobs in order to earn more money. One parent told us that after earning an allowance, her son asked whether he could start a small business doing similar jobs for a neighbor. That’s initiative.
An important part of starting an allowance for your child is teaching them to take a portion of that allowance and adding it to a piggy bank or better yet a savings account. Many banks have special programs aimed at children. They may bring them in, explain about interest and even show them the vault. It can be exciting for a child to watch their account grow.
This one is important. Although a child will not have a regular bill for many years to come, giving an allowance opens the conversation for your child and allows you to start talking to them about the importance of credit scores and making payments on time. You may even show them how you use a tool like the Dayplanner to schedule your monthly bills. And help them add something similar to their lives so they can learn the importance of being on time, whether it’s paying you back for something you have bought them or simply being on time for church on Sunday morning.
The Importance of Privacy
Today children receive their first usernames and password in kindergarten. While they may not be inclined to keep these passwords secret, receiving an allowance and saving money can help them learn this importance. It is amazing to watch them get excited by watching their money grow. Explaining to them how not protecting their password may lead to their money disappearing is a good way to show the importance of privacy and password protection. You may even want to get them a password protection program like the iStratus Vault to show them how much you value their privacy.
Financial responsibility can be taught in many ways but an allowance is a great way to start.