There are a lot of questions when it comes to the best way to raise your children.
In fact, it may be one of the most debated topics out there — and for good reason. While everyone wants their kids to grow up and become upstanding members of society, the methods used to instill these values will differ with each family.
One strategy that has been used to teach kids about responsibility and a strong work ethic is the allowance. However, there is a lot of debate around the idea of giving your children an allowance in exchange for the work they perform around the house and at school. Some parents believe that it is a great tool to teach their kids to be more financially literate, whereas others fear the negative consequences of using “bribery” as a motivator.
This article will examine the pros and cons of the allowance and how to implement it in your home to achieve the best results.
Start Budgeting From a Young Age
I think it’s safe to say that most parents want their children to eventually become financially independent. But how do you make sure that happens?
One way is to start from a young age. Children are very impressionable and learn fast. Start talking with them about money from the moment they can understand what money is and how it’s used. Begin with paying them for small tasks and chores they do around the house. Help them understand that after they do their work, to the best of their ability, they can get paid. Once they start understanding this concept, teach them the different ways they can use their money. For example, BusyKid is an online parenting tool that allows kids to get paid by their parents, save money, spend, and share with charities. This is a great way to teach kids how they can use/save their money.
Kids Don’t Learn This At School
Typically here in the United States, kids aren’t taught financial literacy. Think about that for a second. Is there any class more important and vital to survival, than a personal finance class? How can we expect our kids to know about things like credit or retirement if they aren’t learning them in school? An article by CNBC has said that only 17 states require high school students to take a personal finance course. Because of this, it’s of the utmost importance that parents teach their children personal finance at a young age. Start the habit young to ensure their success.
Is Money The Best Motivator?
One of the main concerns about giving an allowance is using money as a primary motivator. Some parents resort to handing out stars, stickers, or things of that nature. However, money seems to be the best motivator for many reasons. With money, kids can learn how money is exchanged for goods. And if they don’t have enough money for the thing they want, they learn the important lesson of saving money. No matter how many stickers you save, your kid won’t be able to afford that Lego set.
Create A More Financially Literate Generation
Unfortunately, we (The United States) are not very financially literate. In a recent study, the United State ranked 14th, behind Canada, the Czech Republic, and others. What can we do to improve this stat? In a study by PwC, millennial teachers are leading the charge. 62% of these teachers believe financial literacy should be taught starting in elementary school. However, what we can do now is teach our children financial literacy while they are young. Help them understand the importance of money management. Lead by example.
How To Successfully Pay Allowance
There are many ways to successfully pay allowance, but BusyKid is the easiest. With the BusyKid, you can organize and list chores to do around the house, assign them a value, and pay your children directly from your bank account. It’s really that easy. When your child gets paid, they can decide what they want to do with their new paycheck. They can either save, spend, or share (donating to a charity or their choice).
So, should you pay your kids an allowance? In short, yes! Help them understand how money works and the importance of managing it correctly. BusyKid makes this teaching process easy, for both the parent and the child. Start at a young age so they can develop early habits and one day, becoming financially independent.