Released Jan. 7, 2008
ST. PAUL, Minn. -- Providing your children with allowances may help them learn about making wise money decisions. There is no right or wrong way to provide children with money, as families differ in their attitudes and values about money. It’s a family decision.
Allowances are of two types: earned income, where children are paid for completing responsibilities such as chores; and entitled income, where children are given an amount of money on a regular basis.
Allowances may offer both benefits and challenges for a family. Since allowances provide predictable amounts of money for children, it allows the child to practice basic money management skills and encourages independence and responsibility.
An allowance may challenge parents, who may be unsure how much money to give a child, or may worry the money might be misused. Regardless of the type of allowance chosen, the key is providing a way for children to practice making money decisions and learn from their mistakes.
Guidelines for allowances:
- Be consistent in the timing, amount and limits of an allowance.
- Let children learn from their own spending decisions.
- Don’t always come to the rescue, as kids can learn from consequences and their mistakes.
- Practice goal setting and planning for future needs.
- Remember that children will differ in their ideas and goals about money.
- Be patient--kids need time to learn about money. Patient adults can set the stage for a positive learning environment for their children.
It’s important for parents to encourage good communication, consistency and guidance when offering allowances to children. An allowance may be a good way to involve kids in seeing where their money is going and thinking about the decisions they’re making.
(Article adapted from “Children and Money Series: Allowances and Alternatives” by Sharon Danes, University of Minnesota Extension)
For more information, contact Becky Hagen Jokela, a family resource management educator with University of Minnesota Extension at (218) 726-6477 or hagen022@umn.edu.
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http://www.extension.umn.edu/extensionnews/2008/kidsandallowances.html
Contact: Julie Christensen, (612) 626-4077, reuve007@umn.edu
