A weekly allowance is a great tool to help children learn about money. Having his own spending money gives a child the opportunity to make choices, to appreciate the value of a dollar and the satisfaction of saving toward a goal.
However, children who happily spend their allowance on toys and treats throughout their early years are often in for a rude awakening as young adults with responsibilities who cannot always afford everything they want.
One way to set your child on a lifetime path of financial responsibility is to start her on a four-bank system.
Find four jars or containers, like pickle jars or margarine tubs, and let your child decorate them. Decide how much allowance she will receive each week, and discuss how she would like to divide it between the banks.
No. 1 — Spending: The money that goes in this jar is for spending now. This is the money that your child might take along to the store to pick up a small treat. Because it will never be a large amount, this jar helps him learn about making choices and about being aware of value.
No. 2 — Savings: This jar is about setting goals and working toward them. Your child may have her eye on a toy, video game or a special piece of clothing. She can find out how much she needs for her purchase and watch her savings grow. Once she has enough money, encourage her to watch for sales to stretch her money even further.
No. 3 — Growing: This money is set aside for long-term savings. Once a few dollars have accumulated in the jar, go with your child to set up a bank account if he does not have one already. He can then make deposits throughout the year. You may even want to look into other types of investments that will earn more interest than a regular savings account.
No. 4 — Giving: This jar gives your child the opportunity to share with others. Talk with her about some of the different community organizations she can help with a financial gift. Once or twice a year, go with her as she makes her donation, and let her experience the joy of giving.
As with so many of life’s lessons, children learn best by watching you. Talk with your child about where your own money comes from and how it is spent, saved and shared.
By giving your child control of spending, saving, growing and giving small amounts of money now, you are helping him form habits that will be helpful as he grows and takes on more financial responsibilities.
Shawna Munro works at the Elspeth Reid Family Resource Centre, a facility of Child and Family Services of Western Manitoba that offers parenting information and support.
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