One of the things I often hear is all the subjects the public schools should have taught us. As time passes, and as a homeschooler, I find that all the essential subjects are best taught at home. Money and its spending come down to two things: the first being economics, and the second being values. This is not in any particular order, but rather the basis of money and how and why it is spent. Therefore, outsourcing these subjects may be counterproductive and, worse still, flawed.
Our children observe and emulate our actions as parents, making it crucial for us to be mindful of our behavior. We are not just raising children but also shaping future adults. They learn from us how and why we spend money. If you’re grappling with financial issues, there’s a high chance they will, too! Conversely, they will likely follow suit if you demonstrate sound money management.
People may say, “I have a good relationship with money, or I have a bad relationship with money.” This is a good depiction of the emotional side of managing money. Dave Ramsey says best: ” You have relationships with people, not money.” If we remove emotions from our finances, then our management of them is just based on habits. Habits are learned through observation over a prolonged period. Our children are watching us and emulating us until they grow into making their own decisions.
Habits are also best taught by breaking them down into practical applications. Dr. Hain G. Ginott has some fascinating ideas on how to use allowance as a habit-building tool. As Thomas Sowell says, good ideas should be repeated.
Allowance is not used for the following.
An allowance should not be used as a reward for good behavior or as a payment for chores. It should not be used to exert pressure for achievement or obedience. It should not be withheld in times of anger or increased in times of good mood.
What is an allowance, then?
Allowance is an educational device with a distinct purpose: to provide experience usingmoney by exercising choices and assuming responsibility.
Therefore, supervising an allowance would defeat its purpose. An allowance is a tool for teaching budgeting and money management.
What are the stipulations of an allowance?
An allowance requires a general policy that outlines the allowable expenditures. The allowance is expected to cover age-appropriate fixed and non-fixed items.
Sounds like budgeting!
Here is an example of an eight-year-old allowance policy.
Amount: $_____
Fixed expenses
- Saving – we will match the amount to save
- Tithing/Giving
Non-Fixed
- Ice-skating
- Chick-filet-a
- Clothing
- Toys
What can we expect?
Like adults, children will mismanage their budgets and spend too much. Money management should be discussed in a business-like manner to arrive at a mutually agreed-upon solution.
How much is a fair allowance?
There is no magic number. The allowance should fit the household budget. Whatever was previously budgeted for those line items remains the same; the fund’s management responsibilities are now turned over to your child. This is how money is taught by watching first, and then applying it practically.
This is a long-term practice; allowance increases may happen over time. If a child requests an increase, reverting to the budget is a practical approach rather than trying to convince a child that they do not need more money.
An allowance should be at the child’s capacity to manage it. A good time to start is when a child begins to count money. If a child is overburdened, lessen the amount given and revise the allowance policy.