To give or not? A tricky decision that involves more than just the dollars you will pay. Managing a small portfolio has many other lessons.
In some families, from the start of school, the children receive a small allowance. In others, not a penny passes between parents and children in the form of “pay”. The decision is often based on family values and parents' relationship to money. Because we must not hide it, our children imitate us… even in our consumption habits. And having to instill in them the benefits of budgeting and saving if we have rather full credit cards, it forces us to review our own ways of doing things. Like us, children have desires and would like to be masters of their decision. However, for the experience to be truly beneficial, it takes a bit of financial education! In short, when the day of the first allocation approaches, it is better to be well prepared. Here are some ideas to help you think about it.
Planning and organization
Allocation must rhyme with planning, discussion and organization! A necessary trio so that your child understands the responsibility that comes with the money hereceives. Having an allowance first helps kids understand that money doesn't grow on trees or in an ATM. Also, by granting them a certain amount each week, we empower them and show them that we trust them. It is a rewarding experience for them. And obviously, receiving pocket money is a step towards a certain autonomy, small at first, but which can increase later with the first jobs.
Giving an allowance is not a trivial gesture, so take the time to discuss with your child what he plans to do with his money. Help him by giving him advice, but leaving him some leeway. To have pocket money is to become big for him! He is master of his wallet. And that requires a certain letting go on the part of the parents as well. Sometimes he has to learn from his mistakes. It is then up to us as parents not to fill in the gaps. Our child spends the whole day after his allowance? Too bad if he can't rent the desired movie on Friday with his friends. He will have to learn from his mistakes and learn the consequences of his impulse purchases.
Without blaming them, instead show them how to plan their expenses, how to divide their allowance according to their wants, and how to measure the impact of their choices.
You will learn a lot about your child by observing their consumer behavior. Is he a spendthrift? The money himdoes it burn your fingers? Does he think about saving to afford what he wants? Does he notice sales in stores? Is he attracted to advertisements? Too influenced?
Many financial specialists agree that you should open a savings account at the same time as you start the remittance of the allowance. Thus, we teach some basics of saving and we teach him to better assess his desires and to space them out over time.
Having an allowance can help children…
- Acquire the value of money
- Better manage their desires and desires
- Making Choices
- Learn to negotiate
- Taking responsibility
- Be independent
How much to give?
To establish the amount to pay your child, first rely on your budget and not on what the other friends receive. It takes a reasonable amount for you as well as for him. To establish the amount, also think about what you will pay for it and what you will no longer pay. You can, for example, choose to pay a larger allowance if you no longer pay for him the movie ticket with his friends, the rental of the video game or an th nail polish. Of course, you will continue to buy him his essentials, but if he wants a special pair of shoes, it may be up to him to pay the difference between what you are willing to pay for the "regular" pair and the top fashion pair.
Some are based on age: 7 years old=$7 per week, 8 years old=$8, etc. We have to be realistictoo. If our child mostly wants to rent movies with his allowance, but those cost $4.99, a $4 per week allowance won't be enough. It is very likely that he will not save to rent it in 2 weeks.
Finally, another good idea would be to space out the payment when the children get older. Switching to a bi-weekly or monthly allowance would allow them to learn to better manage and plan.
“How much do you pay me to empty the dishwasher? »
Warning! Here is one of the pitfalls of an allowance. Your child may want to negotiate a nest egg every time they do a chore around the house. Giving money for household chores does not encourage a sense of sharing or collective responsibility. Family support should not be sold. It is up to each family to define which spots can be paid for and which are not. Define in advance the tasks for which you will pay a special allowance. If, for example, you pay a neighborhood teenager to mow your lawn, you can give the same amount to your growing child who wants to take care of this task.
For sound management and not having to negotiate in front of a "How much do you pay me to pick up the garbage?" or "Do you give me money to do my homework?" », make two lists with the children and establish that for everyday tasks (making his bed, picking up his clothes, emptying the dishwasher, taking out theoil changes, etc.), there is no allocation or even negotiation. Be clear and firm on this point. Then, list the exceptional tasks for which you will pay them (example: washing the windows of the house, painting the fence, washing the car, etc.)
Also, according to experts, giving an allowance based on academic performance would be a bad idea. A little extra during an exceptional newsletter or a turnaround in performance, yes! But not on a daily basis. Education is too important to monetize it like this.
According to Lewis Mandell, a University at Buffalo professor and financial education guru, pocket money could be harmful, especially if not managed strictly. “Getting a child used to getting money effortlessly is the best way to prepare him for social assistance,” he stated in L'Actualité in August 2009. Source: L'actualité, August 2009
Stop
Even if you have decided to give your child an allowance, your job does not end there. You must still supervise him for the first few months by accepting that he buys things that you consider superfluous or useless, but by putting a stop there if his purchases contravene your values (cigarettes, degrading magazines, lottery tickets, etc.). At this point, you could easily stop giving him money or at least have a frank discussion with him. Stopping the allocation could encourage him to obtain money in other not more advisable ways.
In the end, it might be easy to use money as a means of punishment or blackmail, but in the long run, you won't gain anything. He didn't make his bed? How can you deprive him of his allowance if you do not pay him the amount in exchange for his family chores? Be consistent and above all rely on your good judgment. It is a common learning, on two levels, which begins. But above all an enriching experience for your child who is learning to set foot in the adult world. You show him your trust, he must understand that he must not betray her.
