How to Use Allowance As Money Exercise for Children?

It’s quite a common practice for parents to give their children an allowance. They should know that allowance can actually be used to cultivate good habits in managing money. Parents should shape the financial blueprint of their children. Parents shouldn’t allow children to go through too much of the trial and error process. They should apply their knowledge and experience to improve the financial capabilities of their children. Parents may allow children to form their own financial style or habit, but children should know about the basic rules and obvious financial mistakes that many people do, such as buying unnecessary items.

The general education system doesn’t place much emphasis on proper money management, so it’s up to parents to instil good money management skills. In this case, parents should make sure that they can become good role models. So, allowance can be used as an exercise to improve basic money management. Because children have their own money, they can weigh in their spending choices. Because allowances for smaller children are generally quite small, they can learn from their mistakes. Even if you have warned your children about specific rules, it will be very likely for children to end up making mistakes.

However, mistake is part of the learning process. Once children have firsthand experience about the impact of their mistake, they will become more careful. As an example, you may give your children weekly allowance. If your children spend the allowance in just a couple of days, they will feel the real impact of this mistake. Regardless of how much they beg and whine, you shouldn’t give them extra money. It’s a good punishment to let children know about how financial mistakes can cause future problems in their lives. Parents should be clear about financial rules and clarity is very essential. Parents should tell children about things that they must, should, should not and must not buy. Make a short list of these items based on the categories. They should be consistent interactions between parents and children to discuss about proper money management.

Parents should also require children to save money using their allowances. If children fail to save their money by the end of the week, they can be given an agreed punishment, such as reduced allowance to compensate for lack of saving in the previous week. Parents can motivate children, as they watch together the accumulation of their savings. So, it is clear that with allowance, parents can find out whether children really do their financial responsibilities.

The basic allowance can be made quite small, that it covers only the very basic necessities of your children in their daily activities. So, parents may allow children to earn more money by doing household chores and other tasks. This will also nurture the responsibility with the family. Eventually, children will not do it for money, but because it’s already their obligation. So, parent need to focus on the sense of responsibility of their children. Parents should be able to teach children about the value of money. Allowance can help to build a long term foundation for the financial well being of children. So as adults, children can do things in the right direction.

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