If we want to nudge children to establish ideal money management habit, we will need to give them allowance, so they will understand about the concept of income. The relation of allowance and money education is actually quite obvious. Income is one of the essential components in finances, so children should know that it is possible for them to get money and they need to know how to manage their own income. Fortunately, children don’t need to go through too many trials and errors. Adults could instruct them on the proven, basic money management methods, which can guarantee success.
Children should be assisted to develop their own financial habits or styles. In fact, children who don’t get steady allowance could develop bad financial habits, because they are not trained how to manage their income. Money education should be designed to help raise financial awareness and instil solidly structured money management skill. Many parents weren’t trained about good financial skills, but they still can try to create new habit and tradition that can be passed to the next generations. Parents are always considered as good role models, so they should be able to become more dependable financially. This should be the time to teach our children about something that’s better and basic money management can be taught easily if children have their own income.
The key factor would be interest. Children and teenagers often develop significant interest on specific things in their lives, such as music, sports and technology. By providing allowance and good money management methods, children could have strong interests in financial matters. Children will know that acquiring something also means that they need to spend some money. Often, parents should allow their children to make mistakes. It is better to make a simple financial mistake today, than making a much bigger version later in their adulthood. As an example, first-graders can be given $5 each week and they should know how to manage the money. As an example, they could save the money entirely or part of it for various purposes.
When children are bigger, they should have a list of that they need each week. The list should include the amount of weekly or monthly allowance. It means that children will no longer whine or beg for more money. Children should keep a proper log book that includes all available details. The log book can be checked on a weekly basis and children should be allowed to ask questions. If children negotiate for a bigger allowance, there should be some consequences. As an example, children could get bigger allowance only if they are agree to perform more house chores or have better marks at school. This interaction should create an opportunity for parents to realign their money education program to a proper direction. The extra amount of allowance will not be given if in a specific week or month, children fail to do extra chores or have better marks at schools. This will teach children that they will need to work harder to earn more money.