Many parents are thinking about how to teach their children about managing their personal finances. One of the hallmarks of interacting with money as a child is by giving them an allowance. An allowance is essentially money that a parent gives a child for something that they want. As a parent, you will provide them with what they need such as food, clothing and shelter but children are sponges for consumer spending. They consume anything and everything. We are going to explore whether or not you should give your children an allowance every month – whatever your choice is, make sure you know all of the details before you decide.
The argument for yes
On the side of yes, children should be empowered by money instead of being scared or unsure of how money can help them in their lives. By giving your children an allowance, you are teaching them the value of money by giving it to them so that they can learn how to handle it.
Allowances can be given in cash and they can be any amount you choose. A smaller amount is better because it teaches children the value of money faster. One popular strategy is giving children the amount that matches their age. For example, for your 13 year old child, give them €10 as an allowance.
Another way parents give their children financial allowances is by giving them general pocket money that can be used for birthdays or buying things for themselves. Pocket money given by a parent to a child can be used to reward children for things they have done well at school or for good behaviour.
Giving your children an allowance is something that most parents will do because by withholding money, a child will not get to experience what having money is like and this might cause them to spend more money when they do finally get their hands on money.
The argument for no
Giving your child pocket money or an allowance at a regular basis could hurt their ability to learn the value of a pound. For example, if your children always receive pocket money, what will be their drive to work in order to provide for themselves? They will not feel like they need to earn money because they can always run back to you whenever they need money.
Allowances also open Pandora’s Box because once you start giving them money all of the time, they will expect it constantly and this could cause serious stress in your finances because you will need to make up for the shortfall you are experiencing.
A better idea could be teaching them the value of money. For example, if your child cleans the house or the garden, they can be taken out on a shopping trip or you can take them to the cinema. This will help to teach them a strong work ethic.
You could also decide that you give your child pocket money only during holidays or public holidays such as Christmas. This is a time where everyone is shopping and your children will naturally want to buy gifts. This could be a time where you decide you are going to indulge them so that they can also join in on the fun time that Christmas brings.
Which decision should you make?
Ultimately, the decision that you should make depends on your personal finances and how many dependents you have. It might be harder to give pocket money out to children if you have many children who are close in age. If you only have one child, it could be easier. You need to think about what you want to teach your children about money.
Giving your children an allowance gives them the chance to explore their own consumer choices, however giving them experiences instead of money also teaches them the value of hard work. Whatever your decision will be, make sure that your child understands the value of money and that money does not grow on trees. By teaching your children strong financial lessons, they will understand why they are receiving an allowance or why they are not receiving pocket money all of the time.
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