Teaching your kids about money is never easy. At a young age, your best attempts may fall on deaf ears. After all, they have no hands-on experience of the value of money. What’s more, it’ll be a fair few years until they do have to go out and earn. And, that can make lessons here more difficult than most. No matter how much you try to teach them about the importance of saving, there’s every chance they won’t understand your point.
Hence why many parents turn to an allowance to do the trick for them. It may not be the same as going out and earning, but a weekly allowance is a real-world way to teach children about money and savings. And, that could go a long way towards helping their financial attitude in later life.
Though, don’t make the mistake of thinking an allowance will automatically teach positive habits. It won’t. In fact, there’s every possibility that your kids will waste their money the moment they get it. While frustrating, it’s important to note that this is a valuable learning process in itself. What’s more, there are ways to reduce the chances of this happening. And, we’re going to look at them here.
A small allowance is best
Allowance amounts vary vastly between parents. Some are fine with giving kids a large sum, while others stick with a few dollars a week. In truth, though, the small-allowance parents may have things right. After all, handing over a large sum of money does nothing to teach your kid about saving. Instead, it’ll only work to install their current belief in instant gratification. By sticking to a smaller amount, you can at least ensure they have no chance but to save if they want big things. While they may still waste their money to start, they’ll soon realize how much more satisfying saving can be.
Give them a wallet
No matter how much money you pass down, it’s also worth giving your child a wallet or purse in which to keep their funds. You might want to buy something basic to serve this purpose. Or, you could look out for some of the best wallets on the market, and give them something they can treasure for years to come. Either way, having an outlet in which to store their money is a sure way to help them take care of it. Otherwise, they may feel they have no choice but to spend their allowance or lose it.
Put their allowance straight in a bank account
Perhaps the best option of all would be to put that money straight into a savings account. Bear in mind that you shouldn’t limit their access. They won’t learn anything if they can’t reach their funds. But, when it goes straight in an account, they won’t have the money to hand without thinking things through. As such, there’s less chance of them spending on impulse buys, and more chance of their saving for something they want.