The Values of an Allowance

Many parents give their children money weekly, biweekly, or monthly for a variety of reasons. Many parents use an allowance as an incentive for their children to complete chores or do well in school, but there is more value behind this pocket money. Children who earn allowances are learning valuable math skills such as budgeting and saving.

Adults must learn how to regulate their money and budget for all of their weekly and monthly expenses so they will not overspend. These are skills that are not taught in the typical math classroom, so it is often up to parents to pass these concepts onto their children.

Saving

When you start to give your children an allowance it is smart to discuss with them the value of saving money. Even if you give your children very small amounts of money, encourage them to save a certain amount of their allowance each month.

Many banks offer free savings accounts for children. These accounts require a parent's signature in order for the child to withdraw money, so you are able to observe and regulate what type of items your child is buying. Savings accounts offer practical math lessons because they give children practice in addition and subtraction, as well as the multiplication that is involved with interest. An older child can also be taught the concept of percentages with their interest rate. It is fun for children to see how they are saving money and that small amounts of money will create large sums overtime.

Budgeting

If you notice that your children spend their allowance on soda and candy and then later beg for a toy or other item that they 'can't live without!' then this is an excellent opportunity to discuss with them the importance of creating a budget.

Explain to your child that their allowance is supposed to last them until their next 'pay-day'. If there is a toy or treat that they really want but costs more than their monthly allowance, teach them how to budget their money so they can save a certain amount each month. Allow your child to help you create a weekly budget of the family's expenses, and then a weekly budget for their allowance. Over time they will appreciate this lesson, especially when the time comes for them to buy gas for their car or books for college!