Allowances can be a great way to teach children about money.
1) Avoid connecting allowances to chores (although children may choose to earn money from selected larger jobs).
2) Allowance amount depends on your budget and what you expect children to do with the money.
3) Let children learn from their mistakes in spending their money. Show empathy and avoid rescuing.
Finally a Positive Discipline Tool Card that will earn me a father of the year nomination! My kids are going to LOVE this tool card. Currently we don't have a system for allowances. That's probably because my kids don't need anything. Their basic childhood needs have been provided for. (A television, Wii and computer)
Although we do have a system in place for my kids to make money. Now that my son is thirteen, I have stopped paying for a babysitter and instead I pay my son to babysit and my daughter to be good. It is not uncommon for my kids to come up to me and ask "Dad...when are you going out again? I need a new video game."
But I like the idea of allowances for a few reasons.
1. My daughter is starting to take an interest in fashion. Last week we went shopping at Justice Just for Girls. (Which is a great place to shop with your daughter and I highly recommend it.) But those adorable fashion choices can add up. I like the idea of allowing my daughter to start budgeting for her wardrobe using an allowance.
2. When kids have their own money, you can start teaching them about investing. I wish someone had taught me about investing when I was young. I would have bought 5,000 shares of Apple in 1980 and would be celebrating my early retirement right now.
3. Paying my children an allowance will spare me the Lemonade Stand experience. Any of you who have ever had your children beg you to help them with a Lemonade Stand know what I am talking about. It's kind of like Play-Doh. It's fun for kids, but parents have to do all the work of cleaning up.
4. College Fund!
5. By the time my kids get their driver's license, they will be used to budgeting and paying for things themselves. So they will probably want to start working to earn their own money.