Everyday Cheapskate: 5 Reasons to Give Kids an Allowance
At the foundation of your children's financial intelligence should be this undeniable truth: It is not the amount of money you have but what you do with it that matters.
This is true for a child managing a $5-a-week allowance or a corporate executive with a $5,000-a-week salary.
For the better part of my life, I didn't know this truth. On the contrary, I believed that more money was the answer. I was convinced that if we would just make more money, win the lottery or receive some unexpected inheritance, all of our money problems would vanish. But the more we made, the worse our problems became. Because I didn't know how to manage what we had, more would have never been enough. We didn't save. We didn't give. We didn't plan. And we had no idea where all the money went.
Unless your children learn simple, wise money management techniques, more money will never be enough.
The simplest way to get started building financial intelligence into your kids' minds and hearts is by putting them on an allowance and then requiring them to suffer or enjoy the consequences of their financial decisions.
Here are five good reasons to put kids on an allowance program:
1. It teaches kids about real life.
Nothing beats an allowance for a hands-on course in values. Having their own money teaches them about responsibility, consequences, saving and charity.
2. It helps distinguish needs from wants.
Do they really need that new video game or those peace sign earrings? Having their own money forces kids to think about what to spend it on. It doesn't take long for them to realize that when it's gone, it's gone!