Teach your kid to be money smart with an allowance!

Giving your kid an allowance is a personal decision based on factors such as your kids’ age, level of maturity and their understanding of the concept of money.

While having an allowance may teach your child the proper way of handling money, it is still your responsibility to talk to your kid about budgeting and saving. For tips on how you can do that, click "next page"...

Food Expenses

Obviously, food is a necessity and you should be providing this for your kids at home. But if you and your kids agree that they’re old enough to buy their lunch and snacks in school instead, then their allowance should cover this. For teens who are already allowed to go out with friends, money used for eating out can also be covered by their allowance.

School Supplies

School supplies are usually bought at the beginning of the school year and is paid for by the parents. However, if your child loses his pen or needs a folder for a school project, he can already use his allowance for this. This teaches your kids to allocate money for important things he might need.

Accessories and Other Vanity Items

While it’s okay for parents to spend on a nice pair of earrings for their kids’ birthday or other special occasions such as prom, they shouldn’t make it a habit of doing so on regular days. Kids should learn to differentiate needs from wants and a tenth pair of earrings is definitely a want. Giving kids an opportunity to spend for their wants, especially if they’re pricey, teaches them the value of saving. It also teaches them to be patient and responsible.

Transportation Expenses

If your child is already old enough to commute, then this expense is already something that you can include in his or her allowance. It can include transportation expenses going to and from school or even whenever he or she goes out with friends. Kids who are old enough to drive should also be given a responsibility to handle their own gas money.

Entertainment Expenses

Curb your desire to buy all the toys your child wants to have. It will do him good to learn to save for them first. Have a child who drags you to Timezone every single time you take a trip to the mall? Cut a deal with him and tell him you can only go when he has saved enough money from his allowance already.

For older kids, wanting to go to the mall to watch movies or hang out in a coffee shop is normal. But the cost of movie tickets and cups of coffee can add up real fast. Your child will figure this out soon enough if he has to spend for these himself.

ABOUT THE AUTHOR: Janice Lim

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Written by

Janice Lim

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