Parenting: Teaching Kids Good Money Habits

Allowance is an important step in a child’s development to individuate from parents. Parents can help the child become independent, learn the value of money, and gain self esteem by giving a child a regular allowance.

* Becoming independent. When a parent gives a child allowance, the child has money of their own. They can spend it on what they want. They can save it if they don’t have enough to buy something they want. They can donate it to charity. They can buy something for someone else. They can have a private part of their life separate from their parents when they have their own money and their own financial life.

* Children lose money and can be sad that they don’t have it. They can learn it’s value by having it or not having it. They can see that money is a valuable tool that can help them do things that they want to do.

* When children use money successfully, they feel good about themselves and this builds their self esteem in a way that parents buying them the same thing, does not.

Parents should follow the following tips for allowances

* Give the same amount every week.

* Don’t link allowance to chores or behavior. Some parents do choose to punish children by docking their allowance if they misbehave. I prefer that parents give kids a graduated time out — or depending on the child’s age, grounding the child, and not linking money to the behavior.