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Dario in Stack That Money,

​Why is allowance important for kids?

The most common way of teaching money management to kids is giving them some money (allowance). This is a very important step in a child's life, because you use allowance as a teaching tool.

If you teach them a lesson while they are still young, they are going to implement these methods when they grow up.

And of course, you, as a parent, should give a good example to your kids by doing proper money management yourself. They watch everything you do, and learn from you.

So, your goal is not to give them way too much money, because when they have everything they want, they are going to spend it on something they don't really need, just want, and this is a bad step backwards. Give them some advice while the stakes are still small, and watch them progress.

For example, you give your kids money to buy school books, and they go out and spend everything on candy. This is your time to shine. Teach them that they should have thought about splitting the money up in two parts, and spend one half on candies, and the other on books.

Most important things are that money is here to pay the bills, save, but of course for enjoyment, too.

If you give homeless people money, they will do the same. This is not mandatory, it is your choice to do that. Everyone has a mind of his own and should think what to do with his money.

There is, of course, an alternative to all of this, for parents that do not want to give their kids allowance. There is nothing to be ashamed of, no one does the same thing and we should respect that.

Alternative tips:

- When you go out to the store to buy groceries, tell your kids the maximum limit that you will spend, and stick to it

-Tell them about all the people that don't have any money to spend, or have a fraction of what your family has. This will make them think about buying certain items that they don't really need.

-Ask what are their priorities in shopping

-Do not push your kids by leading their spending habits. In that case, you can buy anything you want yourself, and all this effort you put in will have no effect. You should teach them what they are doing wrong, and teach them why it is wrong.

-Kids will see the mistakes they are making by spending on the wrong thing, so point out what they did was wrong

-Make them understand that saving is not instant, and that the biggest savers are those who save slow and gradually

Money management is a very useful skill for adults and the kids. Ninety percent of people will tell you that no one taught them money management, and they had to learn it by themselves.

Be the parent who taught their kids money management, because this will mean a lot to them in the future.