We realize many things that we regret doing and not doing as we grow up. One of these is probably learning how to handle money correctly. Some of us received some guidance from our parents. However, others learned this the hard way.
As someone who’s been through problems with handling money, we don’t want the next generation to experience it again. We want them to be successful in all aspects of their lives. But, of course, this includes their finances.
Some people reach young adulthood without understanding some basics, including money. This is why we should teach kids about money as young as possible.
There are many ways to do this, but one of the easiest and most effective ways is using their allowance. Here are some suggestions on using the allowance to teach kids about money.
Let Your Kids Use their Allowance for Basics
Budgeting money for the month can cause a severe headache. All the bills from utilities, banks, insurances and the likes are hard to balance against the available funds. Not to mention the allowance you should allocate for the food and other essential things you need to survive.
We suggest letting your kids use their allowance for the basics. You should still ensure that your kid is well-fed, clothed, and guided when doing this option.
Try giving your kids allowance for their grocery spending to help them understand that they cannot buy everything they want and just spend what they can. It will also help them understand why having bacon slices for breakfast is not good for you physically and financially.
For the older kids, you can try giving them their allowance for their school needs. If they need school clothes or supplies, they will need to spend based on your budget. It is the best way to teach kids that they can’t buy branded clothes or things all the time.
Avoid Using Allowance as Punishment or Reward
Some of us may have experienced getting a lot of allowances because we did something our parents liked. Or maybe a deducted allowance because we made our parents mad at us. We all still remember most of our memories with money when we were still young. Little did we know that using money as a reward or punishment might negatively affect us.
Instead of teaching your kids how to manage money, using allowance as a reward will make them think about money differently. Unconsciously, they may only do things just because they get rewarded. If they are not getting paid, they may not follow you anymore.
There are other ways to reward your kids for doing something good. For example, you can let them choose which restaurant you’ll go to for your dinner. Or maybe they can choose the place for your next outing. Or better if you tell them how much you are proud of their accomplishments.
The same goes with using allowance as punishment. It gives kids a negative effect. As kids, we know that there’s nothing worse than feeling unfair treatment.
Just because your kid could not get a high score in their exam doesn’t mean they didn’t make an effort. Then as a punishment, you’re going to cut off their allowance. This may give your kids a cruel or arbitrary impression of you to your kids.
Find other ways to tell your kid that whatever they did was wrong and not suitable for them. Do not use money as a punishment. It won’t help your kids form a healthy relationship with money.
Let Your Kids Learn from their Mistakes
Learning how to handle money when you are already an adult can be challenging. Most of us get our paycheck and just spend it for whatever we want. If there’s something left, you will put that as your savings. But what if there is nothing left from the paycheck. If you think about it, paycheck is an adult version of an allowance.
Give your kid an allowance and allow them to budget it on their own. Eventually, they will realize their mistakes or, if not, guide them by talking to them.
With this method, they will learn a lot of things about money. For example, they will know the freedom of having their own money, but they will also understand the responsibility that comes with it. Spending their allowance on a single item can make them realize that they will end up having no money when they need it in the future.
The bitter feeling of having no money for something you need because you splurged on unnecessary things is memorable for young minds. It’s tough love but a needed lesson.
Resists helping them by giving them more allowance. Let them learn from their mistakes. They may think that their parents are always there whenever they fail with handling money.
It is much better to teach your kids how to handle their money by learning from their mistakes when the money they are spending is still not much. The main goal of this method is to learn from their mistakes while they are still young and use them when they grow up.
These are some suggestions that can help your kid learn how to handle their money through their allowance. These methods mentioned are the simplest and most effective according to their parents.
We all want to raise financially savvy children. Someone who can budget, save and responsible borrowers to a legal lender cash mart like a Clementi money lender. We hope they will not end up as someone who runs away from loan sharks and hides from credit card debts.
However, as a parent, you know your children. We know what they want and do not want. We know what their strengths and weaknesses are. We also understand what makes them happy and sad. Even the things that interest them and make them feel bored. The point is that you know which of these will suit your kid perfectly.
As a parent, we want all the good for our kids. So, let’s all guide and help them become better. With this, we know that they succeed in their life.