Some parents think of allowance as a hand-out that spoils kids. Here’s why it’s not and why every kid needs an allowance.
Who could forget that first moment of staying upright on a two-wheeled bike despite skinned knee and bruised ego? Or the time we finally got the angle just right on the basketball before hearing it “swoosh” through the hoop?
Those skills took practice – repetition and often lots and lots of practice.
Maybe we made a number mistakes along the way, or maybe we mastered the skill after just a few tries, but eventually we got it and it stuck.
But when it comes to money, we’re often left to fend for ourselves – how to make sure we have enough money to cover rent, how to use a bank account, how to resist the sky blue cardigan sweater we just can’t live without…
If we hope to set our kids up for financial success, they need practice with money – and lots of it.
Practice Makes Perfect
There are many ways we could do this – we could have our kids work for example, which is a great solution for older kids.
But if we’re going to give kids the ultimate hands-on education with money, we want to give them years of practice – years of making mistakes, years of feeling buyer’s remorse, and years of realizing money actually doesn’t grow on trees.
As Ron Lieber, author of “The Opposite of Spoiled“, put it: ” Money is like a musical instrument. We want kids to practice at it, and get good at it.”
So in comes allowance.
Every Kid Needs Allowance
But what is allowance? A handout? A way to lavish our kids with money so they can buy whatever their heart desires?
Could be – it all depends on how we set it up.
If we hand money over to our kids without also making them responsible for certain purchases, then allowance is an empty hand-out.
Instead, if we make clear to our kids that they will be responsible for buying their own craft supplies, Legos, or when they’re older – clothing and school supplies, then allowance becomes a way for kids to practice budgeting and saving.
Making Mistakes – And Lots of Them
And let’s hope our kids make lots of big mistakes managing their allowance money.
Hopefully they’ll spend all their cash on that couldn’t-live-without $50 box of Legos only to find there isn’t enough left to buy the scooter they so desperately wanted in the summer months.
Or better yet, maybe they’ll spend their savings on a $150 pair of jeans only to find they don’t have enough to go to a concert with friends.
Once someone feels the pain of having mismanaged money or experiences buyer’s remorse, they’re unlikely to put themselves through it again. Failures can be a lasting way to learn life lessons – and better to have our kids learn now than when the stakes are higher in adulthood.
As parents, we’re raising adults, not kids.
If that’s the case, we need to make sure our adults are ready to handle one of the most difficult responsibilities of adulthood – managing money.
Allowance provides kids with a way to experiment with money – how it works and how to manage it and what happens when things don’t go as planned.
Letting kids have an allowance can be messy, but having adult kids with little understanding of how money works is even messier.
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