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If you’re like many of our readers, you’ve fought with the idea of giving your kids an allowance. Perhaps you’ve already started and are wondering where to go from here, or maybe you’re just getting started and want to make sure you’re getting off on the right foot. Whatever your situation, this week’s blog will help bring light to and answer all your allowance-related questions.
Whether we like it or not, money is an important part of life. In order for children to learn how to have a positive relationship with money, they need to have experience with it. Money management and good financial habits are not generally taught as part of the regular school curriculum, which means that it’s our job as parents to educate our children about money.
Giving your child an allowance in exchange for help around the house is a valuable opportunity to teach your child how to manage money from an early age. Experts have suggested that financial literacy may be equally as important as knowing how to read and write in this day and age.
When your children are small, an allowance will cover the cost of trivial things like noisy trinkets or sugary treats, but as your child gets older it may be used for more useful things like hot lunches at school or a night out at the movies with friends. Your youngsters’ level of financial responsibility should grow with them. Allow them to make mistakes; they will eventually learn that money is limited, and they need to plan their spending accordingly.
Although there is no magic age to start giving your kids an allowance, most experts suggest that five to six years old is the most typical age to start. You could also begin once your child receives their first toonie for their first lost tooth. Since this is many children’s first experience with money of their own, you may wish to capitalize on that and start educating early.
This is up to your discretion completely. Many families will correspond payment amount with age, per week. For example, five dollars per week for a five-year-old child. This formula provides an automatic pay raise on their birthday and cuts out any possible reason for argument.
Other families will base it on the size of the jobs that are done. If one child picks up a few toys off their bedroom floor and the other child rakes all the leaves in the yard and puts them all into bags, do they deserve the same amount of money? This can be a good opportunity to teach your children that working hard pays off.
Another good option is to simply pay a dollar a day with a biweekly payday (you can match this up to your own payday). Remove one dollar from the total amount every day they don’t do their chores in those two weeks and give them an extra dollar for every chore they do above and beyond what is expected of them. This reminds them that they actually have to do the jobs in order to get the money (just like a real job).
Just because we want our children to have good financial habits and a positive relationship with money, doesn’t mean that we as parents always have. All parents have made money mistakes before and some still struggle with their finances currently. 78 percent of Canadian parents have made an effort to teach their kids about money, but 60 percent of those don’t think their teachings have been effective. Encourage your children to put some thought into where their allowance is going and suggest that they follow the three S’s – spend, save, share. Getting your children into the habit of saving a little, spending a little and sharing a little will create healthy financial habits that will translate well into adulthood.
We need to create conversations about money every day, including everything from earning it to spending it, saving it to donating it. The goal is to teach kids to think about money and how to make responsible decisions with it. Share your knowledge about finances with your children and include them in your everyday budgeting and shopping trips to get them familiar with how money works (and also how it doesn’t).
If you’d like to learn more about healthy financial habits or are currently struggling to manage your own, contact one of our trusted Licensed Insolvency Trustees, as they are trained to work with you to determine the underlying cause of your financial difficulties, as well as deal directly with your creditors.
We are conveniently located across the Lower Mainland, Fraser Valley, Vancouver Island and Sea-to-Sky Corridor with offices in Burnaby, Campbell River, Courtenay, Duncan, Langley, Nanaimo, North Vancouver, Port Alberni, Squamish, Surrey, Vancouver and Victoria.
Licensed Insolvency Trustee
Greg Best enjoys working with clients to create solutions for their financial needs.
CPA, CA, CIRP
Licensed Insolvency Trustee
Chris Sinclair believes a practical approach is required to solve serious financial difficulties.
Cynthia’s goal is to ensure that every client feels respected and understood and to instill hope that they can get their life back by giving them the fresh start they deserve.