How an Allowance Helps Children Learn About Money

Posted by admin on June 18th, 2011 at 07:11am

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This is the VOA Special English Economics Report.

Many children first learn the value of money by receiving an allowance. The purpose is to let children learn from experience at an age when financial mistakes are not very costly.

The amount of money that parents give to their children to spend as they wish differs from family to family. Timing is another consideration. Some children get a weekly allowance. Others get a monthly allowance.

In any case, parents should make clear what, if anything, the child is expected to pay for with the money.

At first, young children may spend all of their allowance soon after they receive it. If they do this, they will learn the hard way that spending must be done within a budget. Parents are usually advised not to offer more money until the next allowance.

The object is to show young people that a budget demands choices between spending and saving. Older children may be responsible enough to save money for larger costs, like clothing or electronics.

Many people who have written on the subject of allowances say it is not a good idea to pay your child for work around the home. These jobs are a normal part of family life.

Paying children to do extra work around the house, however, can be useful. It can even provide an understanding of how a business works.

Allowances give children a chance to experience the things they can do with money. They can share it in the form of gifts or giving to a good cause. They can spend it by buying things they want. Or they can save and maybe even invest it.

Saving helps children understand that costly goals require sacrifice: you have to cut costs and plan for the future.

Requiring children to save part of their allowance can also open the door to future saving and investing. Many banks offer services to help children and teenagers learn about personal finance.

A savings account is an excellent way to learn about the power of compound interest.

Compounding works by paying interest on interest. So, for example, one dollar invested at two percent interest for two years will earn two cents in the first year. The second year, the money will earn two percent of one dollar and two cents, and so on.

That may not seem like a lot. But over time it adds up.

And that’s the VOA Special English Economics Report, written by Mario Ritter. We invite you to share your family stories about getting or giving an allowance. Write your comments at voaspecialenglish.com — where you can also read, listen and learn with our programs and English teaching activities. I’m Steve Ember.

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Under Economy Report

20 Comments

  • 1. IBK KHANH  |  June 18th, 2011 at 6:33 pm

    in fact, this content is simple but extreme meaning.
    Allowance Helps Children Learn About:
    1.control their budget
    2.thinking before doing with money
    3.build some experience when they are young.
    4.taught them to be independent as a child
    and etc. this is as method that Japan apply!
    thanks the lesson!
    IBK

  • 2. ivy  |  June 19th, 2011 at 8:26 am

    childrens have depend on their parents. they are still too young to know how spending with their money. this subject is very good, but i think it only apply for develop countrys as American, Japan… for our Vietnamese and developing countrys will spend a long time to finish to invest personal finance. but i believe if we try to built our country now and in the future, we can finist anything which we want.

  • 3. ivy  |  June 19th, 2011 at 8:56 am

    you write very good. i will vote your comment a my favorite. but i want to ask you that why don’t my listenning hear ? and how about you ?

  • 4. Dao  |  June 19th, 2011 at 9:15 am

    Unfortunately, I can’t hear this lesson. When I clicked on loudspeaker emoticons below the lesson’s title, it appeared FILE NOT FOUND and had no any sound. How about your listening?

  • 5. ivy  |  June 19th, 2011 at 9:20 am

    hehe. i’m ,too. but you don’t worry any more. Maybe all people can’t hear it. i think it has a error about sound, and nest listening will hear good. good lucky.

  • 6. Thao truc  |  June 19th, 2011 at 12:43 pm

    nothing to tell much.when i was a little young i have used the money to bought any things i like. The children of rural would be to do that as soon as 4 ,5,6 age.may be or may be not good. The best is they would known count a quickly and they can confident to choose foods they like but this is uncomfortable in today and ………………………………….. i cant. you can continue.bye

  • 7. Hy  |  June 19th, 2011 at 3:43 pm

    Teaching for children about earning and using money is also education,but it has to do by the parents.Children get a allowance from parent and learn how to use it.That is needful.
    I agree that it is not good idea to pay children for work around the home.The children must understand that they have to do something at home to help their parents,that is also education.
    Earning a little amount allowance from parents brings always great fun for children.
    The individual character of a child will be formed in young and little age.A way to use of money show one side of this character.
    For this reason should be carefully with money!

  • 8. sea  |  June 20th, 2011 at 12:22 am

    when I were a kid , my mom often gave me a bit money every day to use.
    I often bought biscuit, toy or anything which a kid like.
    when I was older, my mom taught me ways to save money.
    My mom said that:” A good girl or woman must know to save money!!”
    Now, I think that my mom is right.

  • 9. bee  |  June 20th, 2011 at 12:35 am

    i think that this lesson is so good But I hear nothing! !
    hope it’ll be repaired!!!

  • 10. na  |  June 20th, 2011 at 6:44 am

    i don’t hear this audio, what’s the matter with my computer?

  • 11. ngocnt  |  June 20th, 2011 at 8:08 am

    I can’t down load this lession ” How an Allowance Helps Children Learn About Money”
    Could you pls send me file MP3. My email: ngocnt@massogoup.com
    Tks a lot

  • 12. Dong Quy  |  June 20th, 2011 at 10:24 am

    Receiving an allowance period may be help children to learn the way use their money from they are young. When I was a child, my family was very poor, so I didn’t have any allowance. If I want to have money I had to work something to earn money, such as cleaned up my class room and received salary was 10,000 VND/month. The amount of money I had, I bought something what I like and find it very meaningful. I had to consider more than when I used money of my parents. That’s the first experience I have. I think it’s good for me and any children when having money and make some financial mistakes still they are young.

  • 13. xuka  |  June 22nd, 2011 at 11:05 am

    This article is very useful for me and many poeples. I found out it very interesting. This is exellent experience. It teaches children how to manage an allowance effectively. It helps children balance between their spending and saving with money. Thanks to this information. Have a great day.

  • 14. kiemhieu  |  June 22nd, 2011 at 7:19 pm

    teaching to help children spend money about their life is useful for parents.when i become parent level so at this time we have just seen that this problem is so necessary.this is help for our children to spend and save money

  • 15. Teresa  |  June 23rd, 2011 at 3:58 am

    i agree with you about this. Children should be learn from their parents about how to use money. I think, sometime parents should award a gift or money to their children when they are good children, when they finished their homework by theirself or when they help their parents for work around the home, should’t pay children for work around the home because they will become lazy and not be responsible, they can also become selfish bc they think they have to pay for every help.

  • 16. nam  |  June 23rd, 2011 at 9:20 am

    The great article! It index how to give, and to use money for children. It is truth, sometime the elder ignore evaluation of money too. So this lesson help more anyway to means use money, thanks for VOA!

  • 17. mr sucess  |  June 25th, 2011 at 7:42 pm

    yeah I think the article is very useful. it it somthing like way of education. I wteachng ill see it as good experience for teaching my little kid. Thks a lot

  • 18. tam  |  June 26th, 2011 at 3:38 pm

    I realy feel my-englisch has been better before. Because i can improve englisch skills throught each lesson. It is necessary to me to change studying englisch methods.
    Thanh you for many useful information i have gotten from subjects.
    i think i must try so much more to talk englisch well

  • 19. chippig  |  July 10th, 2011 at 12:35 am

    why can’t i hear anything. this page was not found :-s /
    Can any body help me?????

  • 20. kim lien  |  August 24th, 2011 at 1:43 pm

    I have ever read some speeches like that. In my point of view, money both brings advantages and disadvantages for everyone. But for children, money sometimes like a tool to satify them. If having a lot of money, they can spend in many purposes or someone don’t know how to use. Problem is that how children spend effectively. They can be supported weekly or monthly, but if they know how to spend, they can easily manage money. Children haven’t earned yet. They up to parents, so most of them do not understand the value of money yet. A little allowance also helps them learn about money.


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