Does an allowance teach independence?

Does an allowance teach independence?

Let’s be honest, kids generally like the idea of getting an allowance—maybe they want more candy or plan to save up for a new toy. But as a parent, it’s not always easy to decide if you should pay an allowance, when to start or how much allowance you give your child.

 

Here at GoHenry, we believe that regular allowance is one of the best ways to support your child’s financial education and teach them about independence. Let’s look at some of the pros and cons of giving your child an allowance.

What are the benefits of allowance?

We know that giving an allowance isn’t an option for everyone, but there are some benefits if you choose to do so. The biggest benefit of giving an allowance is that it helps you teach your children about finances and budgeting. Money and finances can be a confusing topic to explain to kids, so giving regular allowance from a young age can help you talk about money with real-world examples.

 

Giving an allowance can be good for parents as well as kids. Does your child ask for candy or toys whenever you’re in a store? Or maybe your teen asks for money to go see a movie or have lunch with friends? Giving allowance means that your child has their own source of money that they can use, rather than asking you every time they want something. 

 

An allowance also helps parents keep track of how much they’ve given to their kids, making it easier to stick to a certain amount each week or month. Lastly, it gives your children a sense of financial independence that can be a great route to learning healthy habits.

Are there any negatives to giving allowance?

Of course, it isn’t totally clear-cut. We know that some people feel giving their children an allowance might not be the right choice. For example, if allowance is given without any lessons on finances and budgeting, your child might not understand how to spend their money responsibly. Some parents prefer to only give their children allowance as a reward for doing chores, as this can help teach your child the value of money and reinforce the link between work and earning money.

How does an allowance teach independence?

An allowance teaches financial independence by giving kids the opportunity to manage their own money, rather than relying on their parents for cash when they want something. Young people can learn important financial skills when they have their own money to manage, like how to budget and save for their goals.There are many ways that you can use allowance to teach your child financial education. 

 

GoHenry research shows how financial education—including an allowance—can help establish great financial habits for adulthood. Our research discovered that over half (51%) of those who received financial education as a child have up to $5,700 or more in cash savings in some form of savings account compared to under a third (30%) of those who didn't. It doesn't matter how much you give them. If you do decide to give your children an allowance, it’s important to pay it regularly. This can provide children with a sense of independence as they can budget and save their own money.

 

Allowance teaches budgeting

Allowance can be a great way to help your kids learn about budgeting. If your children receive a set amount each week or month, you can explain to them how to budget their money rather than spending it on the first thing that catches their eye. 

 

Allowance teaches saving

If you choose to give your child a set amount of allowance at regular intervals, you can use this to teach them how to save up for more expensive items on their wishlist.

 

Allowance teaches the value of money

Some parents like to give their children allowance for doing chores or paid tasks. With GoHenry, you can easily set tasks for children within the app and pay them when the task is complete. This gives your child the opportunity to earn money and understand how working hard can get them money for the things they want. We found that over 70% of young people feel it is important to earn their own money.

 

Allowance gives children freedom and independence

When your child earns an allowance, they have more freedom to spend their money how they want. This can teach valuable lessons about independence, and help to build financial confidence in your children. If they're able to pay for things themselves, they'll feel more self-sufficient and learn how to be financially responsible. Alongside an allowance, giving your child a prepaid debit card from the age of six with GoHenry is also a great way to help your children understand how to manage their own finances from a young age.

 

Allowance teaches price comparison

Having a limited amount of money can help encourage your child to compare prices for items they want to buy. These days there are so many options for buying items both online and offline, and if you give your child a set amount of allowance, you can help them understand how to get the most out of their money.

 

Giving allowance for performing chores

Chores can help your child learn essential life skills, and an allowance teaches independence from an early age. Giving your child an allowance can create opportunities for you to talk about household responsibilities and show them how to take more accountability for their things and spaces. Helping out around the house with chores like setting the table or cleaning the house can help your child feel more involved in the family and learn what it means to earn money for hard work. 

How an allowance ties into savings

If your child is ready to start earning an allowance, now is the perfect time to teach them about savings. An allowance teaches independence and how to manage money. As your child earns their own cash, encourage them to save a part of their allowance toward a goal, in a bank account for kids. Introducing concepts now, like saving for the future and the difference between wants and needs, will give your child a solid financial foundation. 

How can GoHenry help you teach your child independence?

Whether you choose to teach your child financial independence through an allowance or through another method, we're here to support that. 

 

With your GoHenry parent app, you can set up regular allowance payments to your child that they can manage and spend with their own prepaid debit card. This means that your child gets a sense of financial freedom and can participate in the digital economy.

 

 

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Written by GoHenry Published Jan 3, 2023 ● 5 min. read