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"Providing allowances for my two
daughters was one of the best things I ever did," says Carole Rison,
an Owingsville, Ky., Extension agent, who views allowances as one of
the most important tools for teaching financial management.
Instead of allowances, some parents
prefer to dole out money as their kids ask for it.
"This can be a control issue,"
believes Mary Anderson, an extension educator in Buffalo, Minn. "The
parents want to decide how money is spent."
But, says Anderson, whose own
children were paid for working on the family farm, "I'd rather that
kids make their financial mistakes while living at home, when any
mistake is still a minor one."
Other parents polled agreed that
allowances offer kids an opportunity to learn about budgeting,
shopping carefully, donating to church or charity, and saving for
large purchases or such future expenses as college.
Your decision depends on your family
values, but however your children receive money, experts encourage
you to strive for good communication, consistency and guidance.
Sharon M. Danes, writing in
"Children and Money: Allowances and Alternatives" for the Minnesota
Extension Service, describes two kinds of allowances: the one that
is earned, which is modeled on paid employment (payment for certain
tasks), and the "entitled" allowance, which implies that children
are entitled to a share of family income, just as they are expected
to assume a fair share of family chores. Both can work well to teach
the concepts of earning, spending, saving and credit. Whichever
system you choose, says Dr. Danes, be consistent with your payments
and establish rules for how the money is to be used. In every case,
children should have some discretionary money -- money that they can
spend however they want, so that they can practice making their own
decisions.
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Other
guidelines from Danes:
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Be
consistent with payments. Kids need to know when to expect their
allowance so they know how long money must last.
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Don't
rescue children who run out of money. To learn to manage money,
kids must face the consequences of spending mistakes.
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Do not
use money as a reward or punishment. When children are given money
for such positive behavior as good grades, thoughtfulness or
helping at home, they learn to put a monetary value on achievement
and character. Similarly, don't withhold an allowance for
misbehavior.
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Do not
compare one child's money management with siblings or with other
children. Respect children's individuality.
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Be
patient. It takes kids time to learn money management and to
develop a sense of financial responsibility.
- Don't overreact. An overemphasis
or repeated emphasis on money mistakes gives children a
disproportionate sense of the importance of money in life.
For more information, see the
complete "Children and Money" series on the University of Minnesota
Extension Service website. Type "Children and Money" in the search
box at upper right.
[Republished with permission from
Parenting Press News for Parents, copyright 2005. For a free
subscription, see
www.ParentingPress.com/signup.html.]
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