Should You Give Your Kids Allowance? – Part 2
In the first part we talked about the benefits of giving allowance to your kids. With the help of allowance, you can teach them multiple financial concepts, such as managing money, budgeting and saving, and teach them how to be responsible and grateful from a young age. Although giving allowance to children can improve their intellectual development and help them become more mature, if it’s done without careful planning and supervision, it could have negative effects on kids.
Each family takes different approaches on giving allowance based on their financial situation. Some parents give kids allowance in exchange for doing chores and other parents prefer giving a fixed amount of money at the end of the week or end of the month. Regardless of how parents choose to give their kids money, their children should have full supervision from parents.
In this part we’ll discuss about the possible negative effects of giving allowance:
Too much focus on money
If parents give kids allowance without any condition and supervision or put too many conditions on receiving an allowance, there is a risk that the child will start thinking in terms of getting paid rather than helping out the family. As we have discussed in the first part, giving money to children is like a training wheel that helps kids become familiar with the concept of money and learn how to manage their money in the future. Therefore, if the reason of receiving allowance is not clear for children, it is possible for them to become too obsessed with money and forget their responsibilities.
Giving regular allowance to children might increase their expectations from parents. For example, if a kid receives allowance for doing certain jobs in the house, in times when there’s a lot of work to be done, they might expect the parents to give them more money. This could also have the opposite effect when a kid has enough money and is not willing to do chores since he/she doesn’t need the money.
Some parents give their children unlimited amount of money when they ask for it, which can result in the child spending the money on unnecessary stuff. A bad spending habit can stay with kids even when they reach their adult years. So the best way to prevent such behaviors is to limit the amount of allowance based on the general financial situation of the family and the age of the children.
The relationship between a parent and a child is unique, but introducing the idea that completing a certain task and helping out around the house warrants a payment is dangerous. In order to avoid becoming the employer of your children rather than their parent, your main focus should be teaching them the value of their work in the house and only use money as a tool for teaching them important financial lessons.