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Starting an Allowance: Money Lessons to Teach your ChildThink your child is ready to handle his own money? Read on for tips on teaching him how to manage his allowance with care.by Mari-Ann Santos .
Having an allowance can benefit your child in many ways - as long as it is given with the proper guidance in handling money. Aneth Ng-Lim, corporate affairs director at Citibank, says that communication lines should be open between you and your child at all times. “I encourage parents to hand out money advice along with the allowance. It’s important to let your child know what the allowance is for - say, for lunch or merienda, not for toys or candies that are also sold in the school canteen.”
“The money talk shouldn’t happen only once - it should be an ongoing conversation,” she adds. “And make sure you talk to your kids not just about spending wisely, but also about saving and earning money.”
Yes, a regular allowance can teach your child the basic concepts of spending, saving, and money-management early on. Magnolia Alano, a financial planner, says that even if your child brings baon to school every day, you can still give him with enough allowance “for emergency.” Doing so could help strengthen your child’s ability to make important spending decisions (“When should I use this money?”) and take responsibility for his actions.
The right age and amount
When it comes to deciding on the best time to start giving your child an allowance, it’s really your prerogative. “Every family is different, and giving an allowance is something you decide to do after determining the need for it and what feels right to you,” says Lim. However, most experts agree that it is best to start your child on an allowance only when he understands the concept of handling money already.
“Make sure that the allowance is just right for your child’s needs,” Lim continues. And work with a reasonable amount. “Don’t give too little that he can’t buy the right kind of food he needs, or give too much that he ends up with more than enough funds. This will only tempt him to spend it on unnecessary things like candies and junk food.”ADVERTISEMENT - CONTINUE READING BELOW1 of 3 NEXT