Financial Friday - March Edition: Giving Children an Allowance

Welcome to the March edition of Financial Friday, Oklahoma Money Matters' online personal finance question and answer forum. This month, we're answering a question about giving children an allowance.

My 8-year-old has been expressing interest in receiving an allowance lately. While it's a positive idea, I'm pondering the best approach to educate them about money management and spending, considering their young age.

Getting an allowance presents an excellent opportunity to instill crucial money management skills in your child. The lessons they learn now will significantly impact their future financial planning and handling of debt. Here are some effective strategies to impart financial wisdom:

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1. Establish clear boundaries and set expectations. Determine the expenses your child will manage independently with their allowance (like snacks at events, toys, or gifts for friends) versus the costs you’ll continue to cover (such as lunch money, school supplies and toiletries).
2. Encourage saving and charitable giving alongside spending. Applying the 60:30:10 rule can be beneficial. Permit them to spend 60% of their allowance while requiring them to save 30% for long-term goals and 10% for charity.
3. Allow room for your child to make mistakes. Despite the difficulty in witnessing our children's poor choices, mistakes often serve as invaluable teaching moments. Even if you foresee your child regretting a purchase, consider letting them proceed. When they approach you later, expressing regret and asking for more money, decline and use the opportunity to guide them through reconsidering their decisions, stressing the importance of thoughtful purchases and discussing alternate approaches for the future.
4. Introduce practical examples from the real world. Involve them during grocery shopping trips. Collaborate on a goal, like selecting healthy after-school snacks or choosing nutritious dinner options within a set budget. Empower them to take charge, allowing them to comprehend the expenses associated with feeding a family and explore the concept of comparison shopping.

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Regardless of your chosen method, strive for consistency and maintain an open, honest dialogue about earning and spending money. Remember, your influence and actions serve as the most powerful educational tools! For more information about teaching your kids about money, check out our resources in the "Parents" section at OklahomaMoneyMatters.org.

As always, if you have money-saving tips you'd like to share, send us an email at?[email protected]?or?submit a personal finance question?for a future edition of? Financial Friday.?Thanks for participating in?Financial Friday. It's never too late to take control of your financial future!?

The OKMM Team?

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