Almost every parent is going to consider giving their child an allowance at some point, but teaching children about financial responsibility is easier said than done. Many are unsure of when to give an allowance, how much should be given, and if it is a good option for their own child. For parents that are on the line, here is a look at some of the pros and cons of giving their child an allowance and how it could impact their lifelong spending and saving habits.
Almost every parent will begin giving their child an allowance to teach them about financial responsibility. No one wants their child to become an adult without having a firm grasp on how to make and save money. When children are not exposed to money at an early age, it will become much more difficult for them to fully conceptualize it when they become an adult. Until these lessons are learned, money is often seen as an abstract concept in a child’s eyes.
It is not a requirement to tie a child’s allowance to chores or other forms of work, but it is one option that many parents do decide on. At an early age, children will begin to form the connection between work and financial rewards. This will have the benefit of actually transitioning their mindset from thinking of money as an abstract item to having a tangible value. Many even consider an allowance as a form of positive reinforcement for their family.
Even a financially stable family will argue about money at some point, but one option to limit these arguments is to agree on an allowance. Instead of children whining or nagging for money, they will know exactly how and when they will receive their allowance. Anything that is not considered a necessity must be saved for and purchased by the child. If parents remain firm with these rules, then they may find that their family is not revisiting the same arguments time and time again.
There are no two families that are alike, and this means that allowance stipulations for one child may not work for another. Parents will need to carefully consider a wide variety of aspects regarding the allowance such as when to start, if the child must do chores, how much will be given, and how much control the parents have over their spending. This often means that allowances require continuous tweaking by parents and their children.
There are actually a number of studies that now show allowances may harm a child’s perception of money and work. When a child is forced to ask their parents for money, then they will have to carefully consider what they are purchasing in order to explain it to their parents. If the money comes freely or it is expected, then they may not actually get a firm grasp on the value of money and its relation to work.
Once a child simply expects to have money, then it becomes difficult for them to break this habit. Some children will begin to feel as if they are entitled to an allowance instead of it being something that is freely given by parents. The easiest way to ensure that the child does not develop these feelings is to adhere to rigid rules. Whether it is maintaining certain grades or doing chores, the entire family must be clear about when children will have their allowance withheld.
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