Lauren J. Muzzy | Posted on Apr 01, 2016
Deciding when and how your children should begin receiving an allowance or completing household chores for extra money takes careful thought and planning. If you don't believe in "allowances", don't feel compelled to pay just because your children want them. But, be sure to provide your kids with opportunities to earn extra money and learn how to manage the funds they earn or get from you.
Even though the rules for allowances and earning extra cash differ from household to household, there are some basic guidelines that all parents can follow. Here are six useful tips to help create an environment that will teach children how to earn, save and spend money in their early years.
- It's never too early to start.
A child as young as 3 years old will often express interest in learning about money and how items like their favorite snack are bought and sold. By the time they are 5, many already have started saving single dollars and an assortment of coins.
- Establish who gets what.
Develop a consistent system that pays more to older children because their needs tend to be greater. Many parents seem to favor a plan that increases at the start of each new school year. It's a good idea to present your proposed plan in writing and seek input from all members of the family. Then, make adjustments accordingly.
- Describe the rules.
Children should understand why they are receiving an allowance and what expenses it's supposed to cover. If you've decided to pay an allowance to your children because they are members of the family, tell them so. But also remind them of the general responsibilities they have as members of the family. If the allowance is tied to age appropriate household chores, describe those assignments in detail.
- Pay on time.
Paying on schedule will teach your children the value of honoring one's obligations. If you think it’s acceptable to pay them a day or two late, they will likely follow suit by not getting their chores completed on time.
- Allowance is not a control device.
Unless the allowance is tied to specific work tasks, you should avoid threatening to withhold payments. If the allowance is related to work, be sure to indicate in writing that the allowance may be withheld if the assigned jobs aren't completed.
- Develop accountability.
Some parents require their children to account for how the money is used. This kind of activity can prepare children to handle larger sums and manage a checkbook. As a rule, you should avoid questioning the purchasing decisions of your children. However, you may want to offer helpful advice on how the money can be spent more productively.
Establishing an allowance is just one way parents can help children mature into financially responsible adults. This spring, financial institutions throughout Pennsylvania and the United States are supporting Teach Children to Save, a national program --- sponsored by the ABA Community Engagement Foundation --- that organizes banker volunteers to help young people develop a savings habit early in life. This year, the official Teach Children to Save Day is Friday, April 29. Learn more about this program at www.aba.com.