Learning about money and how to handle it is an essential life skill, and something that's taught in most schools. Nothing beats practical experience however, and kids really begin to understand the value of money when they have the opportunity to manage some of their own.
An allowance is a great way to teach your kids how to handle money. There's a lot of advice available on allowances. Here are a few top tips we've collected.
- Decide how much the allowance should be. There are several ways of doing this but one good option is to work out how much you are already spending on them. Identify the things they could take responsibility for and calculate this back into a weekly allowance.
- Agree with your child what they are expected to pay for out of their allowance. Cover:
- Spending - toys, lollies, special items of clothing etc.
- Sharing - birthday presents for family or friends, charity etc.
- Saving - ideally up to 20% of the allowance should be saved to help towards those more expensive items kids often want.
- Help them work out a spending plan but don't dictate how they should spend their money - the key thing is that they are responsible for it.
- Discuss whether extra money can be earned from doing chores. Opinions vary on this subject and every family is different. The most important thing is to set the rules and stick to them.
- Pay on time. This will help your kids to plan and also teaches them the importance of honouring obligations.
- Consider opening a bank account for them. Why not introduce your children to the concept of banking from an early age. You can set up their allowance as an automatic payment and they will receive statements showing how their money is growing. It will also introduce them to the concept of interest.
Theres an ASB bank account just for kids - it's called Headstart. Open an account and your child will get a handy Kashin Money box! Theyll also receive a monthly statement so they can see how their money is growing.
Important: Headstart account available to customers age 18 and under. Account opening criteria, fees and service charges apply. Personal banking terms and conditions apply and are available, free of charge from any branch of ASB Bank Limited.
Important disclaimer:
The views expressed herein are those of the authors and are based on information believed but not warranted to be correct. Any views or information, whilst given in good faith, are not necessarily the views of ASB Bank Limited and are given with an express disclaimer of responsibility and no right of action shall arise against any of the authors, ASB Bank Limited or its employees either directly or indirectly out of any views, advice or information.
