Money and Children
Many families decide that one of the best ways to introduce the concept
of money to their children is through a weekly allowance or pocket money.
Quite often, this money comes with a number of conditions, such as certain
chores which need to be completed, or homework done, etc. Before taking
such a decision, it’s often a good idea to sit down with the child
and explain why they are receiving this money, what it represents to
the family, and what your, as parents, expectations are that the child
will do with that money.
Depending on the age of the child, it’s a good idea to try to
explain to them where the money is coming from, and how much work was
needed to earn it. If the allowance puts a sizeable amount of pressure
on the family finances, then discussing that with the child in an open
and non pressuring way will help them to understand the value of the
allowance.
When setting the amount of the allowance, perhaps asking the child
themselves what they think they are worth, and what they would spend
the money on if they were granted that amount. You may save yourself
some money if the child undersells themselves, or it would be a good
way to introduce financial ‘haggling’ if they overestimate
their worth.
As far as setting conditions for giving the allowance, while this can
be an effective way to demonstrate that effort equals reward in real
life, it’s also important to make sure that the child must fulfil
any number of unpaid chores and obligations to the family and themselves.
Not every thing in life is done for the sake of monetary gain, and conditioning
your child to expect payment for all chores that he or she does is a
recipe for disaster later in life.
If you decide as parents that you don’t want to, or cannot afford
to, give your child an allowance, then the important thing here is to
communicate with your child the reasons why. Chances are many of their
friends will be receiving an allowance, and you will be likely to be
under considerable pressure to do the same. A little bit of communication
and patience will go a long way to alleviating stress and tantrums later
on. If your reason for not giving your child an allowance is from a
purely financial point of view (in other words, you can’t afford
it), it’s often surprising just how understanding and even helpful
children can be if you take the time to explain the situation to them
in terms they can understand.
What you and your child expects should be done with the money is a
real area of potential conflict between parents and their children.
Children, naturally, will want to spend their money on fun items, while
parents might like to see a certain amount of the money saved or necessities
purchased with the money (such as school lunches). While it’s
perfectly acceptable to insist from the outset that a percentage of
the allowance must be saved each week, the concept of saving will be
a lesson quickly learned. Within a short period of time of gaining an
allowance the child will want to purchase something that costs more
than the allowance affords. The only way to buy it will be to save,
and it’s at this point that you can introduce this concept and
explain it to your child.
Another good concept that could be introduced from the start is the
insistence that the child provides a detailed report of where their
money was spent at the end of each ‘payment cycle’. If you
give your child an allowance weekly, then during the week they must
write what, where and how they spend their money. Not only will this
help them to learn about record keeping, it will also give you a good
idea about exactly where your hard earned money is going. If you adopt
this approach, try to set aside some time each month to discuss with
your child about their spending – but remember, they are just
children and you are simply trying to guide them, not dictate. There
is always the tendency in our fast-paced society to expect and demand
too much from our children, including on matters financial.
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