Allowance plan

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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?


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?



What lessons should an allowance plan teach children?

• They do not have an endless supply of money



• How to make choices when faced with multiple options



• Working towards a long term goal has its share of challenges, pains and pleasures



• You have to earn your stripes


The basics

Give your kids a

regular allowance


The basics

Agree on the rules• What it does cover• What it does not

cover• What kids should

NOT do with the money


The basics

Give kids a free hand in

deciding what to do with

their money


The basics

Resist temptation to change the rules


How often?

•Weekly or monthly


How often?

• Make it a religious practice – allowance plans don’t work if not consistently given


How often?

• Older children can be given a bank account that they can operate, and you can transfer systematically to that account


How much?

• It should NOT be–An arbitrary

number – like Rs.100 every week–What friends are

getting


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


How much?

• When you change the rules, change the allowance



How to make it work

• Encourage children to make four categories– Spending (NOW)– Saving (LATER)– Investing (MUCH

LATER)– Sharing (OTHERS)


How to make it work

• Give them guidelines, but resist temptation to make decisions on their behalf


How to make it work

• Allow them to make mistakes


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


Should allowances be tied to chores?

• If they are saving up for something big, offer extra money for extra work around the house


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