Do you know that allowances can teach the life skill of money management?
Imagine how your child’s life would be if you teach him/her the value of money from a young age.
Providing allowances is a positive discipline tool we can use to teach our children many valuable lessons. A lot of parents misunderstand the essence of allowances and end up giving children handouts based on the requests of the child or as gratification for doing chores.
This defeats the purpose of financial responsibility. Don’t give your child money just because they ask for it. It does not teach them how to be responsible because they know that there is no limit to the amount that they can request. Doing this will not teach your children the value of money neither would it teach them how to plan for money or the responsibility that comes with having money.
As Jane Nielsen teaches, giving handouts is a very disrespectful system that leaves everyone feeling bad—parents may feel manipulated by coaxing, crying, or other forms of demand for money, which is never appreciated by their children; and children who do not learn the confidence and self-respect that comes from dealing with money responsibly.
So why should you give your children an allowance?
To give them financial freedom and teach them financial responsibility. It would help us teach our children the importance of not splurging their allowances; teach them to spend some, save up part of it for things they want to buy and give in charity as well.
Ideally, your child should understand the concept of money and how to count it before they start receiving allowances; it should be provided based on what the family can afford, and it should be a fixed and consistent amount.
You can start giving allowances when your child becomes aware of the need for money, hence the opportunity to trust them with money and teach them about the value of money. A small child loves the variety and enjoys putting the money in the piggy bank. As they get older, allowances can be based on need.
Having a regular allowance teaches children goal setting and delayed gratification because they will learn how to save up for what they want. It teaches children to appreciate the money they get, and the effort put into earning the money.
When your child receives an allowance, it is important to reach an agreement with them on what they can use the money for. For example, if your daughter wants to buy a toy, don’t rush to her rescue and buy it for her. Ask her if she has enough money to buy it.
If she does not, develop a plan where she can save a certain amount of money over a period of time to buy the toy.
If your teenage child wants to buy something that is more expensive than what he can afford with his allowance, encourage him to find a legal job where he can earn more money to add to his allowances and get what he wants.
Making children earn allowances for chores can cause a lot of problems especially when the children grow older and are smart enough to decide that they can forfeit the money and not do the chores.
Many problems can be avoided when allowances are not tied to chores. A four-year-old may enthusiastically make her bed for 50 naira but will ask for 500 naira by the time she is eight. By the time she is 14 she won’t want to do it even for a 1,000 naira.
It is better to separate chores from allowances from the onset. Let your children know that chores are done because they are members of the family and they also get allowances for the same reasons.
You can offer special jobs for pay that are beyond regular chore routines. This offers opportunities for kids who want to earn extra money, but does not cause problems if they choose not to take the opportunity
When you give your child an allowance, you are showing her that you trust her with money.
Don’t interfere with what they do with their allowances as long as it is within the boundaries of the agreement because it is a great opportunity for them to learn lots of things like the consequences of spending all their money at once; they also learn to accept the outcome of their decisions and not make such mistakes again.
Don’t rescue your child when this happens. Don’t lecture too.
Also, allowances can and should be renegotiated. Renegotiation is an important part of the learning process as kids get older and their needs change. The start of a new year is a good time to sit down together, look at needs and go over the family budget
When your child has an allowance, it will make it possible to enforce certain logical consequences like paying for certain things like an overdue library book, buying water when they forget their water bottle and so on.
Having an allowance empowers a child and can help develop an entrepreneurial ability. Encourage your child to save some of their allowances. You should take them to the bank to open an account when they have saved up enough money.
Don’t threaten to take away or limit your child’s allowance as a tactic to prevent or punish bad behavior. This will not be a logical nor natural consequence and it only brew rebellion.
Financial intelligence is a life skill that your children need, and you can empower them by teaching them how to spend what they have, how to save up for what they need, if to borrow or not and how to pay back loans.
In shaa Allah, once they are ready to they leave home, they are ready to manage their finances entirely.
I hope you have learnt something. If yes, would you like to join me on the Parenting for Jannah Academy? You should join the Waitlist HERE to be notified when next we are open