As you get ready to start a new year, you may want to adjust the way that you help your children understand budgeting and money. A recent survey shows that children bring in an average of $15 a week for allowance. About 61% of parents say that they pay their children allowance and the average age that children start receiving allowance is eight. As children age, it is common that their allowance increases.
Interestingly, the money that parents are giving their children is not being saved. Rather than saving the money, children often spend the money quickly. Children often do not understand the principles or the importance of saving and it is up to parents to talk help children understand personal finance.
An allowance can provide parents with a great opportunity for teaching children about personal finance. Determining a specific percentage of money that can be set aside each week for long term and short term savings can be very effective budgeting practice.
Some parents find success in offering to match long term savings. If your child is saving for a car or for college, offer to match their savings at the time that they purchase a car or leave for school. This can be a great motivating factor throughout the time that they are saving. Helping your child understand how to handle money at an early age can prepare them to leave the nest and be self-sufficient after moving out.
Help your children incorporate good spending and saving habits with their allowance. Develop a system that works well for children and in your home. The new year can be a perfect time to develop a new system!