Allowances are a great way to teach children how to handle money. Give them a certain amount of money each month to spend, save and give. That allows children to learn techniques that are necessary in controlling money before they are faced with making ends meet when the stakes are higher. They will learn about finances, responsibility and the consequences of making the wrong decision on money.
If the allowance is tied to chores, it also teaches the relationship between work and earning money as well as motivates kids to get their chores done. It also gives them spending money to buy their own items rather than always asking you for money. In addition, it gives them control over what they spend money on.
There are some disadvantages as well. Paying for chores gives kids the idea that everything they do around the house comes with a paycheck. Although it may seem counterintuitive, the research tells us that kids who receive an allowance tend to be less fixated on money in general.
By considering both the pros and the cons, you may choose to give your kids an allowance to teach your kids about money. But an allowance may not be just for kids anymore. Sometimes for the same reasons we give kids an allowance, we should also give some adults allowances. This is a good idea for individuals who can’t seem to control what they are spending on or they continually overspend.
If you are one of those people who never seem to know where your money is going, it may be time for an allowance. We all have spending vices, those little things that we are addicted to buying. It might be shoes, eating out or, in my case, fabric. A friend of mine told me the other day she was afraid to add up what her spending vice was costing her.
We spend for the best of reasons — to treat our kids or grandkids, to feed our creative juices, to acquire possessions or just to take advantage of a deal. But if you find yourself either not knowing where your money is going or, if you are like my friend and are afraid to count it up, it might be time to give yourself or someone in your house an allowance.
The process is simple. Just as you give your kids an allowance, give yourself a certain amount of money that you are able to spend. Put that amount of cash money in an envelope and go about your month. When you have spent that amount of money, you are through shoe shopping for the month. If you have some left over, good for you. Leave it in the envelope and add the next month’s allowance at the first of the month.
This is a great way to control your spending, but it requires discipline to make it work. If you spend your allowance plus put a few special items on your credit card, you have defeated the purpose of an allowance. Stick to the allowance and you will succeed at this method.
Allowances are good ways to teach about money and control spending whether you are 9 or 49.
Roxie Rodgers Dinstel is associate director of Cooperative Extension Service, a part of the University of Alaska Fairbanks, working in cooperation with the U.S. Department of Agriculture. Questions or column requests can be e-mailed to her at firstname.lastname@example.org or by calling 907-474-7201.