An allowance is a great way to teach kids personal financial responsibility. The lessons learned about saving and spending wisely are remembered for a lifetime – whether it’s during a first job or when making large purchases in the future, it is important to start early! Below are some thoughts on getting you started.
Allowance for Chores
Many parents are split on this topic. Some parents offer a base allowance associated with basic daily chores like keeping a bedroom clean; then create an additional chore list so kids can work up to higher amounts. Other parents provide a no-strings attached allowance each week because they believe chores are mandatory without an allowance. Either way, an important piece is that children should be taught through conversation and example how to manage money when they have it.
Options for Saving
A piggybank full of change is a great way to start saving, but consider teaching your kids about banking solutions like checking, savings, or CDs. Belmont Savings Bank offers a range of savings options, including passbooks. You can offer your child the chance to put half of his allowance away each month to save for a bigger purchase.
Expose your child to wise spending opportunities. You might visit the Belmont Farmer’s Market and talk about the savings or value you get in food purchases. Allowing your child to make occasional purchases with her own money helps her to develop a sense of scale when it comes to the dollar.
Teach your children to give to others who are less fortunate. You might ask them if they’d like to buy a food item to donate to the Belmont Food Pantry, for example. You could also tie allowance to volunteering during Belmont Serves Day or at Newton at home, the Waltham YMCA, or the Watertown Public Library. Giving kids the option to earn more teaches them to be industrious to save for things they desire.
A small allowance allows your child to practice monetary skills like saving, spending, and giving. It’s never too soon to start teaching children about personal financial responsibility.