Welcome to the Allowance Basics for Kids page, the page where I lay out all the arguments in favor of you paying your child an allowance (kids really love this page).
The earlier a child gets used to the idea of having money - and the benefits and responsibilities that goes along with having money - the better off they're going to be.
Obviously, they're going to need some guidance, and especially so the younger they are, but there's great value in learning the nuts and bolts of money - what and how much money will buy, how to save and accumulate money, how to budget and be accountable for their management of money, and more.
There's great power in learning something when you're young. Odds are that whatever you're proficient at as an adult can be traced back to its childhood roots.
Think back to your own favorite teachers. Did they teach you everything you know about a subject? The greatest teachers are those who introduce us to a subject or idea, inspire us, and then give us the time and space to learn on our own.
Whether we recognize it or not, our kids are constantly learning and making their own discoveries and conclusions (not all of them ideal, of course). Providing kids with an allowance and a little guidance gives them a basic but powerful financial building block.
How many adults find themselves in bad financial situations because they have such negative associations with money and finances? The strongest associations we make are the ones we make in childhood.
I would much rather have my child grow up to associate money with stability, predictability, and self-empowerment than associating it with its absence and all the frustrations that go along with that.
What do you want your child to believe about money? That it's hard to get and there's never enough to go around? Or that it's easy to get as long as he or she adheres to certain rules and principles?
I believe there's a strong connection between math and money skills.
That doesn't mean that artistic and creative types can't be good with money. But familiarity with money, budgeting, saving, and spending provides a practical opportunity to improve your child's math skills.
It's a two way street, of course. The better someone is at math, the easier it will be for that person to identify and make sound financial decisions. And the more comfortable he or she will be in seeking out opportunities to make those sound financial situations in the first place.
It may seem we already covered this in the Money Management and Improving Math Skills sections, but from a purely psychological perspective, it's important that kids have pockets of their lives that they get to control.
Call it independence, autonomy, or responsibility, but kids need to learn how to make decisions on their own.
I often think of parenting as an 18 year process of transitioning control and power from the parent to the eventual young adult. But the most successful transtions are done steadily over time, not saved up until the very end.
Unless, of course, you want your kids living with you until they're 35 . . .
"How to Create a Brighter Financial Future for Your Children"