Learning how to manage money wisely is an important life skill. Teaching children financial responsibility from a young age sets them up for financial independence later in life. Allowances, saving goals and making spending decisions offer plenty of opportunities for parents to guide wise money management.
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Allowance Basics
An allowance provides a safe way for children to start learning money skills. Many parents start doling out a small amount like £1 or £2 per week when kids are around ages 5 to 7. Be consistent with the day you give the allowance and the amount. Save extra one-off payments like bonuses for truly exceptional behaviour instead of inflating the weekly amount.
Use Allowance as a Teaching Tool
Simply handing over cash each week misses the chance to impart critical lessons. Require kids to do age-appropriate tasks like tidy their room, help with dishes or care for pets to earn the allowance. This establishes the work-pay connection and sense of responsibility early. Also, encourage saving a portion by separating funds into “saving”, “spending” and “sharing” containers. This teaches important lessons on saving for goals, smart spending and charitable giving, which are things all children benefit from. For example, if you are fostering in Southampton, your foster children will adapt better to living independently when the time comes if they can successfully manage their own money.
Opportunities to Learn
A regular allowance opens all sorts of learning opportunities beyond the weekly payment. Take children food shopping and get them involved in comparing prices and finding deals. Discuss value when choosing between additional toys or saving up for something bigger. Introduce older children to financial apps where they can track saving goals and spending habits. Work through what happens when money runs out before the next allowance. Real-life practice is invaluable for cementing money
Expanding Financial Independence
As children mature, shift from paying for responsibilities to rewarding actual work. Offer extra funds for household jobs like washing the car, weeding the garden or babysitting a younger sibling. Pay a set rate that you would pay another child carer so they learn what their time and work is worth. Children can also expand money sources by earning or small gifting from grandparents and relatives during holidays and birthdays.
First Bank Accounts
Once kids reach early teens around age 13, they are ready to manage finances more independently. Many banks offer youth accounts for those under the age of 18 that parents can oversee for safety. Opening one with pocket money funds teaches banking basics like deposits, withdrawals, cash cards, online access and monthly statements. As funds grow, nurture wise spending and saving habits by allowing kids to manage funds in their youth accounts. But retain oversight like approvals for large purchases.
Allowances and ongoing money lessons establish healthy fiscal habits that put children on a solid financial footing for their future grown-up responsibilities. By keeping realistic expectations based on a child’s age and ability levels, parents can nurture money skills progressively from basic understanding to confident independence.
