Money Management at Age 5? When and How Should You Give an Allowance to Your Child?
Because the TV, movies and even your local McDonald’s is saturated with advertising aimed at the kindergarten set, getting a case of the “gimmies” seems to happen younger and younger….How soon before the baby will be insisting on Elmo brand diapers?
But you can take one important step to save your money and help you child begin to learn proper money management techniques: by giving an allowance.
When is the appropriate time to start this practice? Generally, children can count and understand the value of low numbers by Kindergarten. Most 5 year olds realize that 3 is more than 2, and are beginning to understand the concept of “not enough.” This is often helped along by school activities that require a budget, such as book fairs and holiday stores. Children are helped by parent volunteers and gently told if they have “enough” or “not enough”. Learning to understand the limitations of their budget at this young age will indeed help them later.
An allowance should become a routine event, sort of like your paycheck. Perhaps your child could get paid every Friday, as you do. However, biweekly and monthly payment is probably too much of a stretch for the younger set- weekly is best.
If you are looking to teach your child proper budgeting and money management, you will want to start from the very beginning. Some of the allowance should be saved, and, if it is important to your family, some of it should be given to charity, too. This can be accomplished by buying three small coin banks, and labeling them “spend”, “save” and “give”. This physical separation of the money is key to young children, as the visual barrier between the money helps them to understand that it is not all one big pot.
“Spending” money should be taken with you whenever you support the child purchasing an item. As children get older, it should be up to them to remember to bring their spending money, but young children will need a little coaching.
“Saving” money should be placed in a bank account when there is enough. Often banks will run promotions for children that include free giveaways and etc, and this is a great way to make money saving a positive experience.
“Charity” money is fun for children to put into red kettles at the local mall or grocery store. Or, you could choose a supply project for your local homeless shelter, and take the child shopping. Again, these positive experiences reinforce your family’s values.
Like all things, money management is a learned skill. Starting an allowance young makes it easy for you to pass your money and budgeting values onto your children.
