Smart Couples Get Rich Together by Cerbasi Gustavo

Author:Cerbasi, Gustavo [Cerbasi, Gustavo]
Language: eng
Format: epub
Publisher: Gustavo Cerbasi
Published: 2012-01-08T16:00:00+00:00

• How to manage pocket money and allowances?

The more time kids spend with other children, the more they’ll need a regular supply of money for various purchases. This need is a result of children becoming part of their peer group: if everyone goes to a mall to watch a movie at the theatre, normally just buying a ticket is not enough. There’s always food or clothing accessories to buy as well. If your child doesn’t follow the habits of their peer group, they could feel left out.

If there’s not much interaction on a strictly social level – for example, if your kid takes part in frequent and intensive group activities, like a sports team or dance classes – they won’t need extra money on a regular basis. The peer group has other priorities.

Giving a child an allowance is an option that should be discussed, ideally, between the parents and the child. Normally, getting an allowance is the kid’s idea and is usually brought up when they hear that other kids at school receive money from their parents. One alternative to an allowance is to suggest that the child ask for just enough money to buy what they need to. It would be wise to set a weekly limit at this time, based on the child’s needs and with the parents pre-approving each purchase. This would teach the child the concept of credit .

In time, these needs will become more frequent and will have an undesired impact on the budget. When this happens, the parents could propose an allowance in order to help the child learn what it means to manage money. In this case, the new concept the child would be learning is financial responsibility .

The amount of the allowance should be based on a budget. Ideally, everyone sits down together and discusses what the children would do if they had their own money. A list should be made of the items they purchase, including snacks, meals outside the home, fashion accessories, going to the movies or to a theme park with their friends, magazines, comic books, etc. Depending on the degree of independence the parents want to give to their children, they could also include items such as clothes, entertainment activities and room decorations. After you get a general idea of the budget, a reduction in those expenses should be negotiated. The allowance shouldn’t be enough to buy everything the children want to buy. They should understand that their parents’ budget is limited and they also have to put off some purchases in favor of others. If the kids want to buy snacks at school and the parents can afford the expense, it’s useful to propose limits – for example, including three snacks per week in the budget.

It will be easier to instruct your children on financial matters if you give them their allowance more frequently. A bi-weekly allowance could produce better effects than a monthly allowance. The rationale behind this is that time is perceived differently by people of different ages.

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