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EDUCATING YOUR CHILD ABOUT MONEY MANAGEMENT
One of the best ways to teach your child the value of
money, how to handle their finances and
not blow their cash is by giving them
a weekly or monthly allowance. However, before you start
shelling out any cash, you should think about your plan
of action is going to be.
Does your child understand how to count money?
The main intent of an allowance is to educate your child
on how to be fiscally responsible. That goal is not going
to be accomplished if they do not know how to count money
or have the knowledge of what money is used for.
Pre-determine how much of your child's allowance is
going to be saved and how much will be spent.
Don't expect your kid to purchase there own
necessities from their allowance. However, the purchasing
of toys and/or candy should be used with allowance money.
Saving a portion of the allowance should also be
implemented in the plan.
If you have children that are older, consider increasing
their allowance enough so that they can pay for things
like lunches, movies, etc.. This will help them
understand and manage their money.
Think about associating the allowance with some sort
of household chore/s
Tying chores in with allowance is good. Rewarding
your child for doing additional tasks around the house is
good for both of you. It will mean less work for you but
more importantly teaches responsibility of having to
'earn' money
Raises will be required!
Your child's allowance is going to have to increase
in proportion to how much you expect from them. Meaning,
are the household responsibilities increasing? What about
the cost of living? Are their social lives flowering? To
keep the learning idea going, it is always a good idea to
re-negotiate your child's allowance. Re-discuss how the
money will be used and how much is going to be expected
for saving.
Determining what your child's allowance should be is
not easy!
Your final decision of how much money to give for an
allowance, and how often, is going to be based on several
variables. You need to think about your income and your
personal values. Don't base your decision on what you
used to receive for allowance as a child.
Once your child is of legal age, help build their
credit!
Open up some utilities in their name. Let them apply
for a
no credit personal loan or
student auto loan. You can learn more about
how to build credit.
Related Reading:
- What you need to look for in a
vehicle when
buying your teenager's first car.
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