Children’s Allowance Guidelines April, 2011
One valuable way to help children learn about money management is by giving them some money to spend. For many this is through a regular allowance given by the parent. Let’s review some helpful guidelines.
Be consistent by setting a day to give the allowance. Agree upon the amount and the limits for spending. You may want to set expectations for spending, saving and sharing.
Children need to be able to spend some money however they wish to practice making their own decisions. This also means you don’t come to their rescue every time your child runs out of money. They need to learn the consequences of their own spending mistakes.
Guide and advise your children’s money decisions rather than direct and dictate. Encourage and praise rather than criticize and rebuke. This helps develop confidence in their ability.
Remember your children will differ. Respect their individuality and avoid making comparisons with siblings or other children.
Be patient. It takes children time to learn to manage money and develop financial responsibility. Frequent references to their mistakes should be avoided; they usually are already aware of them.
The purpose of an allowance is to begin to shift some of the responsibility for goal setting, planning, implementing plans, and making choices for your child. A small investment of time and energy while the child is young can have big payoffs later in life.
For more information on helping your child or children become financial capable, check out the University of Minnesota Extension website, www.extension.umn.edu/youth&money .