Empower your kids by giving them control to manage their own money. Having money control is the only way kids learn the decision-making that is essential to developing financial skills.
Simply having money without control is ultimately unrewarding and frustrating over time. This is true for children as well as adults.
Remember how you felt when your kids were learning to ride bicycles? Remember when you let go of the bike watched your new rider wheel away on their own? You knew there would be bumps and bruises along the way. If you do not let go, your child would never learn to ride a bike.
LINK Be amazed when you give your kids money power
What is money control?
To be in control means to be in charge of how the money is used. When kids are given money to manage they learn management skills by being the boss and having the autonomy to make the final decisions. Hmm, just like adults.
Who is in control?
Parents provide allowances, generally with conditions that put the parents in control. The kids get the message and follow the rules because there is no other option.
Why do parents control their kids money?
Parents, with all good intentions, don’t want their kids to make mistakes or develop bad habits. Using advice from allowance experts they instruct their kids to divide their money into three categories: save, spend, share.
Parent controlling money is top-down
Here’s a typical scenario on allowance day: Kid receives $10. Parent requires the money be divided as 10% give, 20% save, and 70% spend. The kid only sees the $7 because the decision was made by someone else.
I read a comment by a man who was required to save a percentage of his money growing up. Now as an adult, he bemoaned, “And what did that habit do for me now that I have to pay my bills?”
Empower your kids
More experience leads to more skill. Kids can start controlling money before they go to school.
A Purdue University study found that kids can begin to understand basic money concepts as early as 3 years old. It’s never too early to start with the basics of money — and according to the latest science, ages 3-7 is the prime time for introducing children to money basics.
Kids in control learn from their own decisions
Teachers and financial gurus will tell us that mistakes are essential in learning any skill.
Wisdom only comes from making mistakes and learning from them. Unlike riding a bicycle, kids can’t get hurt or hurt anyone else when managing their money.
You will make some mistakes, but if you learn from those mistakes, those mistakes will become wisdom and wisdom is essential to becoming wealthy.~ Robert Kiyosaki
A $10 mistake by a 10-year-old will be painfully educational compared to a maxed out credit card as a young adult that can be a lingering financial nightmare.
Parents transfer control so kids can develop skill
As a parent you use money you would spend on your kids to allow your kids to manage their money and decisions. When you empower your kids by putting them in charge they have real control over real money, no allowance apps required.
- Kids track all money in and out, so they know what’s what.
- The account tells all so there are no misunderstandings.
- Money becomes a neutral topic making conversation easier.
- Kids like having their own money.
- Seeing expenses in the futures makes kids think when to spend money in their account.
- Kids have years of managing age-appropriate expenses
- Gives kids a taste of managing money for fun and expenses
- Repetition creates better habits and attitudes about money
My daughters wrote these comments in the conclusion of my book.
“I loved entering and subtracting money in my account book. I even found ways to save money during the week (which sometimes included a $2 lunch of a chocolate muffin and a soda…sorry Mom!) so I would have more to spend on the weekend. To me it was a fun challenge, but it also made money more valuable because I had a lot of control over how much I earned and spent.”
~ First allowance at age 5
“This was one of the benefits of my parent’s money system in our home. I was unique among my friends because I had my own checking account and control over a lot of spending money. Tracking money on paper was something I did from the age of three and it was something that just made sense to me.”
~ First allowance at age 3
My book, The No-Cash Allowance, is a guidebook for parents of kids ages 3-18 to give them years of hands-on practice controlling and managing their own money. No allowance apps needed.
When you empower your kids with money, responsibility and the control to manage it, they become better money managers.
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