When should children be taught lessons on money? This is a common query among parents.
Five year-olds can appreciate that money is what brings us food at the supermarket, gasoline at the service station, and presents at the toys tore,” says Dr. Lewis P. Lipsitt, a developmental psychologist. Money management techniques should then be taught at this time, and on through pre- and early adolescence. Wise financial management can be precious lessons to them for life. Some parents fail to realize that children, who make their own mistakes, especially on money matters, learn the value of the dollar (or peso, in our case). It is better for children to learn these early when mistakes are less costly and when parents can give them guidance.
Many instructional angles can be brought out when we deal with money and our kids, but let’s zero in on allowance this time. Allowance refers to small amounts of money given for extras, and sometimes, for necessities. A regular allowance can be a very effective teaching tool as long as parents clarify what they will provide and what the allowance is to be used for. When parents do this, they teach the young how to set priorities, discriminate between needs and wants, and how to develop the restraint necessary towards saving.
We have to encourage our children to spend their allowance on needs first and to limit discretionary spending. This way they’ll have money left for savings and contributions to a worth cause.
Each family is unique and may have its own way of handling allowance. However, most authorities agree on certain criteria for effective allowance management. Julius and Zelda Segal, outstanding American psychologists and writers for Parents magazine, present these agreements through the following guidelines, and I summarize them with my own comments here:
1. Keep the purposes of the allowance simple and limited. Children and early adolescents cannot be expected to produce a complicated budget plan which includes hard-to-predict items.
2. Start small, and adjust your child’s allowance upward instead of overwhelming him with too much responsibility.
3. Be dependable. Children need to be able to expect allowance on a regular basis – for example, on the same day each week. Planning is possible only within a stable framework.
4. Adjust the allowance to your own household budget. Learning has to start on something no matter how small it may be.
5. Avoid linking house chores with the allowance. Children should see their role as equal partners in routine family tasks, not as paid workers. However, there is nothing wrong in giving a bonus for special jobs outside the normal line of duty.
6. Avoid using the allowance as a lever to extract desirable behavior. When parents offer or withhold cash depending on the child’s conduct, they encourage him to view money as an instrument for approval, and its absence for rejection – which is a mistake.
7. Avoid offering advances too quickly. Deficit spending is no healthier for children than it is for a nation.
Having, and sometimes blowing, an allowance is how children learn money management firsthand. Let us gradually relinquish our purse strings and allow our children to develop the additional value of that allowance, which is character.
Published in: Family