Does Allowance Really Teach Your Kids About Money?

I’m sure you can guess that my answer would be a big “YES” however this article’s subtitle stated that giving allowance was a “waste of time.” Of course, I had to read on to find out what this heretic had to say.

It turns out I agree. 

If you give allowance to your children without any guidance or daily conversation about money—then you are literally throwing away good money after bad and giving up the opportunity to teach and pass on your money values. Don’t bother to give allowance unless you are ready to talk about financial topics with your children. 

Money is emotional. The earlier you talk about your money values the better off your children will be to cope with money issues as an adult. You want to connect money with values and emotions. For example, if they spend all their allowance before the next payday, don't bail them out. Let them learn from their poor choices. Now the lesson will stick otherwise it’s just numbers.

Allowance is a parenting tool. You need to spend the time upfront to design an Allowance Program. Only then will you have success in teaching your kids and teens about healthy money habits such as living within your means, understanding the pitfalls of too much debt and investing for the future to meet important goals. 

If you would like guidance in building your Allowance Program, check out 5 Steps to a Successful Allowance Program.