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Children and money --

Why allowances?       Send a link to a friend

[FEB. 12, 2005]  Should children have allowances? Some parents say yes, others no.

"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:

  • Be consistent with payments. Kids need to know when to expect their allowance so they know how long money must last.

  • Don't rescue children who run out of money. To learn to manage money, kids must face the consequences of spending mistakes.

  • 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.

  • Do not compare one child's money management with siblings or with other children. Respect children's individuality.

  • 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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