Providing an allowance helps kids learn how to save and spend wisely.
I tend to dread summer a little, as it takes a lot of creativity and a lot of energy to keep my kids occupied. In particular, I dread grocery shopping with my kids! It always turns into buying things I didn’t need because my kids continually ask for things while we are in the store. We are working on this!
It is great for me to at least be able to say to them: “You have your own money. If it is that important to you, you buy it!”. It’s true: my kids do have their own money and it is for spending and , in fact, I want them to spend it (well at least some of it)! Allowances can be delivered in many different ways but what we find works best for our family is to give our kids a lump sum each week and have them divide it (while supervised ) into 3 categories: saving, spending and charity. The savings funds go right into piggy banks in their rooms (which is deposited once a year into the bank); the spending funds go into their wallet; and the charity funds go into a jar that we use for various good works throughout the year.
This method has worked really well for us. We don’t tie the allowances to chores. The kids get the money regardless of what they do, but there is the opportunity to earn more money by taking on extra chores. Having the spending money on a weekly basis allows our kids the chance to accumulate and spend on a regular basis. I often don’t like the choices the kids make to spend their money on: I can’t tell you how many weekend trips we have made to the dollar store just so the kids can spend their allowance on a dollar toy. However, this is part of the lesson too- they sometimes see bigger ticket (and better quality items) and realize that they will need to save longer for them. This takes discipline and planning- both of which are excellent skills to develop for lifelong money management.
I have spoken to some parents who transfer the funds electronically to their kids bank accounts, because they find it is hard to have the cash to pay the kids regularly. I personally feel that paying the children with cash is preferable as it helps to have something physical to manipulate (and you help them learn about fractions at the same time!)
Now for the hard part… actually remembering to pay the allowance!