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💰 How to Use Allowance to Raise Financially Smart Kids


Check out our website for more information and links to buy  Raising Financially Independent Children  

 

Allowance is one of the best opportunities a parent has to teach a child about money. It introduces them to the concept of budgeting, delayed gratification, and making thoughtful choices—key financial skills that will serve them throughout life.

🧠 Why Allowance Matters

Allowance is often the first time your child is learning to budget. But how much allowance you give can make or break the learning experience.

  • Too little, and the child won't be able to successfully budget.

  • Too much, and the child won’t learn how to make decisions or prioritize spending.

The right allowance allows children to practice saving, spending, and planning in real-time, in age-appropriate ways.

📊 Age-Appropriate Budgeting Lessons

The way children budget will change with age:

  • Young children might save allowance for a few weeks to buy a toy.

  • Older kids may need to budget to have enough money to go to the movies with friends at the end of the month.

  • You might even encourage your child to put part of their allowance toward long-term savings (like a car at 16) or charity.

🕒 Teaching Delayed Gratification

Delayed gratification is learning to wait for something you want—a critical money skill.

Example:If your child receives $5 per week and wants to play laser tag for $11, they must save for at least three weeks before they can afford it.

If you step in and cover the cost, they may learn that saving isn't necessary because “Mom or Dad will pay.”Letting them wait builds both patience and financial confidence.

🏦 The Power of Visual Saving

For young children, visual aids help!Give them allowance in quarters they can drop into a clear jar. When they want to buy something, count the quarters with them. Seeing the jar almost empty might make them think twice:“Do I really want to spend it all?”

Sometimes, just watching their savings grow can be deeply rewarding.

👨‍👩‍👧 Who Should Watch This?

Whether you're a:

  • New parent

  • Grandparent

  • Aunt, uncle, or family friend

  • Guardian or teacher

…you can help raise a child who is smart about money by teaching these simple but powerful lessons early on.

📚 Companion Guide for Paren

Our YouTube series “Raising Children and Money” is a perfect companion to the book Raising Financially Independent Children (available on Amazon).

This parenting guide teaches:

  • How to introduce allowance

  • How to use stories and real-life examples

  • The benefits of empowering your child to make money decisions

  • Building long-term habits like saving, planning, budgeting, and giving

🎯 The End Goal

By teaching children how to manage their allowance wisely, you're preparing them to:

  • Budget independently

  • Understand the value of money

  • Build an emergency fund

  • Start adulthood with a strong credit score

Let’s raise a generation of financially independent young adults!

 

Check out our website for more information and links to buy  Raising Financially Independent Children  

 

 

 

 
 
 

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