FAQs,allowance,frequently answered questions
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Allowance 101: 6 FAQs Answered

Planning your child’s allowance is the first step to introducing him to the value of budgeting and understanding the value of money. Read up on these parents’ top concerns and what our experts recommend.

coin purseWhen should you start giving your kids an allowance? What’s the best age?
Melissa Cruz, Parenting Cluster Head at CEFAM (Center for Family Ministries), recommends that parents star by observing their children first. Trust the child with a small amount first and observe how the child will handle the money. This will help you gauge his spending habits and what his idea of money is. “This will depend, of course, on the maturity of the child,” emphasizes Cruz.


How much is the ideal amount (depending on age), and how much is too much?
Anna Mae Tuazon, a registered financial planner and researcher for a research institution, urges parents to use two points of evaluation to gauge how much allowance they should be giving their child. “The first point of evaluation is need. Second, evaluate how responsible your child is in safekeeping and spending the money. “

Tuazon also points out that age plays a big role, as needs such as food will be affected by the child’s size and appetite. How responsible a child is also plays a part as he may already be entrusted with emergency money, or allowance beyond food and transportation needs.

According to Cruz, on the other hand, the amount will have to depend on the family’s set of values and budget. It’s also important that you take into consideration certain factors such as family income and the school the children go to in order to determine just how much allowance to give your child.


How often should you give your child an allowance? Weekly? Monthly? Daily? What’s the best way for him to manage it?
“A weekly allowance will teach children how to budget and will reduce their temptation to spend on unnecessary things,”  says Tuazon. “However, if the child is still not ready to budget, the parent may opt to begin with a daily allowance, then a bi-weekly allowance, then progress to a weekly allowance.”

Cruz suggests to depend the schedule of giving the allowance on the child’s age. Give daily allowance to younger children and weekly allowance for older children who are already prepared to start budgeting their money.

 

Click here to see more answers to parents' allowance FAQs.

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Read on to see more answers to parents' allowance FAQs.

 

Is it okay to still make them packed lunch even if they have an allowance already?
Larry, an entrepreneur, prepares daily packed lunch for his 7-year-old daughter Jodie, and gives her 50 pesos allowance every day to teach her about money and savings. “I’m a very frugal individual and I want my child to understand the worth of money in these tough times and what real necessities are.”

Tuazon believes that preparing packed lunch for your children even with an allowance is a good opportunity to develop and observe your childs’ ability to save money. “If the child is able to save up some of his allowance (which means there is a “surplus” from the allowance), then as long as you are able to provide him with that amount, then encourage him to save.”


Is it okay to still control what they buy (for example: food or toy) with their allowance?
“Yes, after all, their allowance is a privilege,” Tuazon says. “It will be the parent’s responsibility to ensure that the child manages the money properly.”

“Yes and no,” says Cruz. If the children are saving, allow them to spend their allowance on whatever items they need or want. “This is depending on your child’s age, of course,” reminds Cruz. Parents should be sensitive to your child’s needs and should be able to decide for their child if what he  wants to buy is something that is important enough or if there are better things to purchase.

“Reserve certain expenses or items for special occasions,” suggests Cruz. This will help prevent your child from spending on unnecessary things, and will help them to be patient and to treat money as a way as well to reward themselves for an accomplishment. “It’s all about timing and setting expectations to instill values. Set limits,” Cruz adds.

“Compare the worth of an expensive item versus an important item, say, how many McDonald’s meals can be bought for the price of one expensive toy,” suggests Cruz.  This will help your child establish a sense of worth and practicality, and it helps as well for him or her to discern the value or the need to buy something.

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Click here to see more answers to parents' allowance FAQs.

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Read on to see more answers to parents' allowance FAQs.

 

What’s the best way to deal in case your child already used up his allowance and he still needs the money?
“Evaluate why the child already used up his allowance. Where did the money go?” says Tuazon. If the child has changing needs and his allowance is no longer sufficient for his needs, then parents should think of ways to adjust the budget. “If however the money went to unnecessary expenses, the parents should talk to the child about managing his money. The parents may then opt to adjust the frequency of disbursing and/or the amount of allowance that they will give the child.”

“Have a talk with your child the moment you give him his allowance. Explain that it’s hard-earned money.” says Cruz. Make him understand the work you put into being able to provide him his allowance. This way, your child will be treat his allowance with value and will think more before using up his money.

For older and more mature children, Cruz strongly advises that parents enforce rules so that lessons are learned. “When you give a budget, don’t rescue them,” Cruz urges. “Let your yes be yes and your no be no. Let them learn what it means or feels like to not have money.”


Melissa Cruz, Parenting Cluster Head for CEFAM (Center for Family Ministries) and Anna Mae Tuazon, a registered financial planner and researcher for a research institution, share the following practical and helpful tips to teach your child to manage his own money:
1.    Money Jars. Divide clear jars (since kids are visual) for different purposes, such as short-term (weekly) and long-term (money you can physically put up in the bank) purposes. Discuss with them what these are for and how the money saved will benefit them in the future.
2.    Have a field trip to the bank. Bring them along when you deposit their money so that they have a concept of savings and explain where the money will go to, say, for their college tuition or birthday party.
3.    Chores. Encourage regular age-appropriate chores (packing away of toys, setting the table, etc.), something they can do and they can do well without yaya’s help. Let them earn their money.
4.    Money monitoring. Ask your child to write down in a small notebook all his expenses. This way, the parents can monitor how responsible the child is and what his needs are.


SOURCES:
•    Melissa Cruz, Parenting Cluster Head for CEFAM (Center for Family Ministries)
•    Anna Mae Tuazon, registered financial planner and researcher for a research institution

Photo from sxc.hu

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