Allowance is one of the best tools for teaching your child the value of money. It can create good habits, break bad habits and change behavior. Don’t think of allowance as “Paying Your Kids” -- think of allowance as a tool for teaching financial literacy and an introduction to the wonderful world of money.
Children can start earning an allowance as soon as they know money gets them what they want. This depends on the personality of your child -- if at age 2 he wants anything and everything in sight, then it's time for some money lessons. If your child has little or no interest in wanting everything they see, then they are not quite ready for the fundamentals of allowance.
The amount you pay a child depends on the family income, not age or ranking. Think back to all of the things you bought your child in the last month that was not a necessity. Add up things like candy, videos, toys, CDs, trinkets and other extras. This will be the amount you should allow your child to earn throughout the month. It won't cost you any more money and may even save you some money in the long run.
Next, sit with your child and explain that they are going to start earning an allowance for certain chores, and from now on they are going to use their own earned income to buy the items that you used to buy for them.
Allow your kids to earn money for anything that they are not doing right now! If your child is not making their bed, brushing their teeth, or cleaning their room, start with that. Experts say it takes 21 days to create a habit. Once your child gets in the habit of doing those chores automatically, you can stop paying for the previous chores and move on to other things like cleaning the bathroom, laundry, etc.
The next time you are going out into the market place, remind your child to bring their money. Now they will purchase the items you used to buy for them. You will probably find that your child will make better choices with their money versus your money and will probably think twice before letting go of their cash. If they find something they want, encourage them to do some research to find the best price. I always have my children visit Kijiji.com, which is a free, family-friendly, classified website. Your child will start to see that sites like these are full of items they might want, but they will also see this as another way to earn money by selling items that they have no use for anymore.
You can help your child understand that there are several ways to earn money besides allowance and open their eyes to the wonderful world of money. To receive our free guide on The Smarter Way to Pay an Allowance visit Prosperity4Kids.com.
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