Giving a child a set allowance each week, or for chores undertaken, can be a fantastic way of getting them to appreciate what is given to them, as well as showing them that work must be completed for them to earn money. While they may have their own wants regarding how it is spent, you may also be able to use the allowance as an opportunity for learning about making smart money choices. Although this may seem tedious to them now, they may very well thank you for it when they become independent.
Even though it can be fun to watch a savings pot grow, the actual act of putting money aside that you aren’t allowed to touch can be a little boring. While you might already have savings for your child, they could also put some of their allowance aside themselves. Opening a Junior ISA on their behalf, such as the one found at this site, will allow for regular, or as-and-when, savings to take place. Neither you nor your child will be able to touch this money until they reach the age of 18, so you will all know that it is safe. As they reach their teen years, there may be things they consider doing in the future, which will further motivate them to set some of their allowance aside.
Usually, it is the parents who pay for gifts for birthdays, Christmas, or other occasions throughout the year. However, you might want to consider getting your older child to factor these into their allowance. Once your child is older, they may have a best friend, or even relationship, that is important to them. Needing to buy a gift themselves can help them to learn to budget, as they may want the recipient to genuinely love what they have given. In addition to this, it can also help to prepare them for the future, where you won’t be financially providing for their social interactions.
When children are young, it is up to the parents to provide the essentials for their life, such as food, shelter, clothing, and items that aid with their education. Although these responsibilities are not lessened until your child reaches adulthood, life lessons can certainly be learned. Allowing your child to buy their own clothes, especially if they are a want, rather than a need, or even pay for furniture items in their room, can help to show them the real cost of living. Some children may also find that they respect and value the purchases more, because they understand that they have paid for them. This may also help them to appreciate the Bank of Mom and Dad that little bit more.
Although a child may wish to use their allowance solely for frivolous items, you can find ways to turn these into learning opportunities. Even something as simple as a rule that a percentage of the money they are given must go towards something that is responsible could help them as they grow.