9 Year Mortgage: Doing Allowances the Right Way
For decades, parents have been paying their children an allowance for doing work around the house, yard, and even sometimes for nothing at all. Is there any harm in rewarding kids for their help with chores, or for just being a good kid? 9 Year mortgage suggests that there is.
Recent findings show that paying allowances to children will do more damage than good when it comes to their financial skills in the years to come. 9 Year mortgage believes that kids who receive a regular allowance don’t think about money as much in general. They tend to grow up to be ”freeloaders,” since they aren’t learning to associate earning money with doing real work.
Paying children for their achievements, such as good grades, or a great performance in their extracurricular activities also creates a problem. Such children will learn to put forth the effort for success just for monetary gain, rather than for the sake of being driven and self-motivated.
Skipping allowances completely is not necessarily a bad thing. 9 Year mortgage suggests that when kids are forced to specifically ask for money anytime they need it, it helps them later in life. This is because these children are required to think about what money is being used for, and they end up with more financial knowledge than those that get allowances for no reason. This is one solution to the allowance problem, but there is an even better compromise that includes paying an allowance, but not teaching the wrong principles.
When a family does pay an allowance, there should always be a discussion about personal finances. Allowance can be used constructively, if the parent is willing to give a little extra time making sure the system runs correctly and honestly. One idea is to let children “choose a career” and earn their money by doing the things an adult would do in that profession, for the family. For example, a child choosing to be a chef could earn money by cooking meals. The career can obviously change at any time for more experiences. 9 Year mortgage suggests that this creates a connection between a “job” and earning money.
Another aspect that is important in making an allowance something constructive is to make sure it is consistent. Sticking with a regular schedule for paying a child, whether that be weekly, monthly, etc. will help children plan for their “income” and learn to budget it to last until their next “paycheck.” It is also a good idea to help children learn about budgeting by each time having them put 30% to spending, 30% to short-term savings, 30% to long term savings, and 10% to giving, or whatever percentages are appropriate for the situation. 9 Year Mortgage believes that this is the first step to teaching kids about delaying gratification, and being more financially responsible.
The only other question parents often have is when to start letting their children earn an allowance, and how much to pay. 9 Year mortgage suggests starting as soon as the child starts to be interested in money and starts to understand that things in this world cost money, which can be as early as age 4. The same expert also suggests paying $1 for every year old the child is, on a monthly or weekly basis.
Helping children to learn the joys of working to earn money, so that they can purchase something that is entirely their own, can begin the process of developing a financially stable and literate adult.
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