Allowance plan

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Why should children have an allowance plan

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Allowance plan

  1. 1. www.dhanashiksha.com
  2. 2. www.dhanashiksha.com Children should not be given pocket money because…..  They do not know how to spend money  They will lose it  What if they use it to get into bad habits?  It will spoil them Which of the above do you agree with?
  3. 3. www.dhanashiksha.com Compare this to riding a bicycle • Do you not want to teach a child to ride a bicycle because –He doesn’t know to ride? –He will fall down? –His cycle will get scratches? –He will become independent?
  4. 4. www.dhanashiksha.com
  5. 5. www.dhanashiksha.com What lessons should an allowance plan teach children? • They do not have an endless supply of money
  6. 6. www.dhanashiksha.com What lessons should an allowance plan teach children? • How to make choices when faced with multiple options
  7. 7. www.dhanashiksha.com What lessons should an allowance plan teach children? • Working towards a long term goal has its share of challenges, pains and pleasures
  8. 8. www.dhanashiksha.com What lessons should an allowance plan teach children? • You have to earn your stripes
  9. 9. www.dhanashiksha.com The basics Give your kids a regular allowance
  10. 10. www.dhanashiksha.com The basics Agree on the rules • What it does cover • What it does not cover • What kids should NOT do with the money
  11. 11. www.dhanashiksha.com The basics Give kids a free hand in deciding what to do with their money
  12. 12. www.dhanashiksha.com The basics Resist temptation to change the rules
  13. 13. www.dhanashiksha.com How often? •Weekly or monthly
  14. 14. www.dhanashiksha.com How often? • Make it a religious practice – allowance plans don’t work if not consistently given
  15. 15. www.dhanashiksha.com How often? • Older children can be given a bank account that they can operate, and you can transfer systematically to that account
  16. 16. www.dhanashiksha.com How much? • It should NOT be –An arbitrary number – like Rs.100 every week –What friends are getting
  17. 17. www.dhanashiksha.com How much? • Instead, it should be realistic – Lay down the rules on what the allowance should cover – snacks, transport, gifts for friends and family, clothes and accessories – Add up how much you would anyway spend on that (make sure you include both regular stuff and one-off stuff) – That should be the allowance
  18. 18. www.dhanashiksha.com How much? • When you change the rules, change the allowance
  19. 19. www.dhanashiksha.com
  20. 20. www.dhanashiksha.com How to make it work • Encourage children to make four categories –Spending (NOW) –Saving (LATER) –Investing (MUCH LATER) –Sharing (OTHERS)
  21. 21. www.dhanashiksha.com How to make it work • Give them guidelines, but resist temptation to make decisions on their behalf
  22. 22. www.dhanashiksha.com How to make it work • Allow them to make mistakes
  23. 23. www.dhanashiksha.com Should allowances be tied to chores? • Not for regular chores – Children are expected to contribute to household work not for money, but because they belong to the family – Chores should be linked to age and what kids can do, and not to money
  24. 24. www.dhanashiksha.com Should allowances be tied to chores? • If they are saving up for something big, offer extra money for extra work around the house
  25. 25. www.dhanashiksha.com Dhanashiksha Educational Ventures 6B, K.G.Towers, Velachery Bye Pass Road, Chennai - 600042 Phone - Office - 044 – 45493310 / 044-22593260 | Mobile – 98840-70750 Email: info@dhanashiksha.com | www.dhanashiksha.com Bangalore J-02, Diamond District, Old Airport Road, Kodihalli, Bangalore - 560 008 Phone: + 91 81056 70749 Coimbatore 176, Second Street, Gandhipuram, Coimbatore 641 012 Phone: + 91 98433 79872

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