Some children who receive a weekly or monthly allowance will squander it quickly. This is often a nuisance to the parents because their child is asking for money to borrow instead of managing the allowance. Saving money, on the other hand, can be rather hard for some kids who will sometimes buy the first thing they see.
Below are three steps to help cure children of overspending their hard-earned allowance. Remember that it may take some discipline, but if strictly followed, your child will soon have more money to spend with less arguing over whether or not he or she should receive extra.
The first step to budget an allowance is to urge kids to think ahead. Some children buy anything they can because they can. A comic book, video game, or new pair of jeans might grab their fancy just because there is money in their pocket. Though spontaneous purchases may seem like fun, later, many kids may regret not saving a few dollars for something they might want even more, later.
To get the most from an allowance, children should be encouraged to shop around for the desired item. Waiting a week or so to save enough money and to shop for the best purchase price is a valuable skill. If they want something but lack the allowance right now, don’t allow them to beg parents to hand over a few dollars more. Instead, remind them to plan ahead to ensure they have enough for a well thought out purchase, and that the desired item is really worth it.
The second suggestion for helping kids learn to budget an allowance is to tell them to think about short-term spending needs as well as long-term goals. For instance, everyone enjoys spending money, and sometimes a random sales item will catch our attention. The same is true for kids.
It may be wise for them to go ahead and buy the item as long as they can work it into their allowance budget and be sure they are not overspending on it. Of course, saving part of the allowance for the long-term goal is still a priority, but an occasional random purchase can make life a little more fun at times.
The third step to budgeting an allowance is to list priorities. Some kids draw up a list of what they want and what they need. Suggest that they try to make sure that the needs come first. If they make a little extra by raking leaves or pulling weeds, then they can go off the budget and get pizza or ice cream. But they should be reminded to keep the allowance budget in mind for the long haul.
The key to spending wisely is to save regular income, like an allowance, and wait for something that is desired to go on sale. None of us should recklessly spend. Comparing prices often brings good results, too. If you feel uncomfortable about their spending money on a questionable item, remember that you’re the parent, with the right to step in and intercede if need be. Parents walk a fine line between dispensing wisdom and allowing kids to make mistakes as valuable lessons.
Rather than tossing the kids a handful of cash at allowance time, help them make a budget with categories like those outlined above. Then encourage them to follow it, praising good outcomes, and using bad choices as learning examples.