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According to a recent article published in Money Magazine, parents who implement an allowance system with their children at an early age raise kids who tend to be more financially savvy than those who don’t. They score higher in assessments of pricing knowledge and are less likely to mistake credit as a limitless resource. Giving an allowance is a great teaching tool when it comes to educating children about money management, an ability that will become critical as they reach adulthood. Skills such as how to budget, save, and give to charity can be encouraged by using a weekly allowance and having your child divide it up appropriately. These basic money management techniques give children a sense of empowerment about their personal choices, as opposed to a sense of entitlement that comes when parents forgo an allowance and instead simply give their children money upon request. By encouraging kids to save instead of always splurge, and to give instead of always take, parents are also encouraging kids to become more patient, generous, and thoughtful human beings.
Money Magazine offers eight simple tips to make allowances work for all ages, which can be found here.
