Providing an allowance for children is a common practice in many UK families. Allowances can teach important money management skills, but they require thoughtful implementation to avoid problems. This article provides guidance on the benefits and challenges of allowances and tips for making an allowance system work smoothly.
Budgeting for Allowances
When deciding on allowance amounts, it’s important to set a budget that works for your family’s finances. Consider what you can reasonably afford to provide as spending money for your child on a regular basis. Foster carers receiving an allowance from agencies like www.thefca.co.uk may allocate a portion of this money towards their foster child’s allowance, if appropriate. Take into account the age of the child, with smaller amounts for younger kids and more for teenagers.
The Benefits of Allowances
There are several advantages to giving children a regular allowance:
- It teaches financial literacy skills like budgeting, saving and spending wisely. Children practice using money for real-life purposes.
- It provides a sense of ownership and responsibility. Children learn that they have control over a portion of money to use as they wish.
- It sets the stage for earning money. Connecting chores and good behaviour to allowance amounts teaches that wages come from work.
- It opens conversations about money and values. Discussing how to allocate allowance encourages family communication.
Potential Drawbacks
However, allowances come with some risks:
- Children may demand frequent allowance increases, especially without guidelines.
- Children may spend foolishly without learning money management first.
- Allowance as conditional on chores or behaviour may feel punitive.
- Children may compare allowance amounts with friends and feel entitled to more.
Setting Allowance Guidelines
The key to making allowances work well is taking time to establish clear guidelines upfront. First, communicate the overall purpose of the allowance. Is it intended to cover all of a child’s spending money or just extras and treats? Making this expectation clear from the start prevents future arguments. Next, provide examples of what types of purchases the allowance is meant to be used for, like toys or sweet treats, versus essentials that parents will provide for.
Additionally, decide on a consistent schedule, like handing out their allowance each Friday after school. Routines make it easier for children to budget over time. Linking the size of the allowance to the completion of chores or good behaviour is also recommended but use a clear system so that the allowance feels earned rather than like arbitrary punishment.
Finally, involve children in setting allowance rules so they feel like they are part of the process. But make any allowance increases predictable, like on birthdays, not on demand. Setting guidelines collaboratively and communicating them clearly goes a long way in making allowances work smoothly.
Troubleshooting Allowance Issues
Despite best efforts, allowances don’t always go smoothly. If problems arise, there are ways to troubleshoot:
- If children demand that their allowance increases, remind them of the guidelines for raises set in advance. If children spend foolishly, turn it into a learning opportunity about budgeting for the next cycle.
- If the allowance feels punitive, recalibrate by emphasising the teaching of responsibility.
- If comparisons cause jealousy, communicate that allowance amounts depend on age and that friends likely have different rules.
Allowances offer many benefits in teaching children about money management. But, they require clear communication and guidelines to prevent problems. With reasonable starting amounts, alignment to chores, and guidance on saving and spending, allowances can be a valuable experience.
