Allowance for kids has long been used to teach children about money from a young age. Many studies have backed this strategy by proving its effectiveness. Kids need to learn that money is an asset, and if they want to buy something, they’ll have to make the effort of saving money for it.
Allowance teaches kids to prioritize their expenses. It also shows them that they’ll have to be patient to save for big purchases. These lessons stay with kids throughout their lives and help them manage their finances better. Although it’s an effective system, it doesn’t always work for families. There are no hard and fast rules when it comes to allowance for kids. There may be a lot of trial and error before you figure out what system works for you. But it’s still an excellent method to incorporate the management of money in your children’s lives says Jonah Engler.
When should you start your kids on an allowance?
There’s no set age to begin your kids on an allowance. Some families start their kids very young during their pre-school years, to help them differentiate between their needs and wants. For other families, allowances are introduced around the age of 6, when the kids start losing teeth, and the tooth fairy starts introducing them to money.
Is cash the best option of allowance for kids?
Cash is an easy method to make your kids familiar with money. They can touch, see, count, and keep physical money, so it makes it easier for them to spend and save. However, several useful apps are also available online, which you can use to pay your kids online. PiggyBot and FamZoo are two such apps. PiggyBot allows parents to transfer virtual money in their kid’s accounts which they can track, save, and use.
As per Jonah Engler With FamZoo, parents can even add balance with prepaid cards. FamZoo allows parents to transfer weekly allowances and other payments to their kids. It can then be used by kids to keep track of their balance.
When your kids reach their mid-teen years, you should consider opening teen checking and saving accounts for them. It will make the whole process of transferring funds easier. It will also teach the kids about the account and balance management as well as the use of saving accounts. It will be a significant step to help your kids become independent and financially responsible.
What about college students?
As per Jonah Engler Kids grow up eventually, and in no time become old enough to leave for college. However, that’s only the beginning of their adult lives and not the end of allowances. Although most college students work part-time to pay for their expenses, some may require help from their parents. Even if you’re paying for their education, dorms, books, food, etc., it would be best to give the money directly to them. It would serve the same purpose as an allowance- teaching them financial management and sticking to a budget.
Final Thoughts
Allowance for kids is necessary for both their needs and teaching them responsibility. It will help your kids learn about budgeting and managing money in the long-run.