Free Listening English lessons

How an Allowance Helps Children Learn About Money

June 18th, 2011 at 07:11am Under Economy Report

Audio clip: Adobe Flash Player (version 9 or above) is required to play this audio clip. Download the latest version here. You also need to have JavaScript enabled in your browser.

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.

By admin 20 comments

Words and Their Stories: Money, Part 3

April 5th, 2010 at 07:09am Under Words and their stories

Audio clip: Adobe Flash Player (version 9 or above) is required to play this audio clip. Download the latest version here. You also need to have JavaScript enabled in your browser.

Now, the VOA Special English program WORDS AND THEIR STORIES.

(MUSIC)

Most people enjoy working for several reasons. Their job might be fun, or they like their employer and the other people at work. Most people I know, however, work for the money. I do not know anyone who is loaded, or extremely rich.  Most of my friends work to earn enough money to live. They have to make ends meet. They have to earn enough money to pay for the things they need. Some even live from hand to mouth. They only have enough money for the most important things.

They struggle to earn enough money to bring home the bacon. It can be difficult to earn enough money for a family to survive. Sometimes, poor people even get caught short. They do not have enough money to pay for what they need.

Or they have to spend or lay out more money than they want for something. When this happens, poor people have to tighten their belts and live on less money than usual. I hate when I have to live on less money. It takes me longer to get back on my feet, or return to good financial health.

However, other people are on the gravy train. They get paid more money than their job is worth. These people make a bundle. They really rake in the cash. In fact, they make so much money that they can live high off the hog. They own the best of everything and live in great ease. Sometimes they pay an arm and a leg for something.

Because money is no object to wealthy people, they will pay high prices for whatever they want. Sometimes, they even pay through the nose. They pay too much for things.

I am not rich. I did not make a killing in the stock market when my stocks increased in value. Yet, I am not poor either. When I go out with friends, I do not want to shell out or pay a lot of money. Often, my friends and I will chip in or pay jointly for a fun night out. When we go to restaurants the meal is Dutch treat. Each person pays his or her own share.

Once, the owner of a restaurant gave us a dinner on the house. We did not have to pay for our meals. However, I admit that we had to grease someone’s palm. We had to pay money to the employee who led us to our table. The money was for a special request. Yes, it was a buy off. The employee put us at the top of the list for a table instead of making us wait like everyone else. We had a great time that night and the meal did not set me back at all. I did not have to pay anything.

Because of that experience, I will always remember that nice things still happen in a world that is driven by money. But, that is just my two cents worth. It is just my opinion.

(MUSIC)

WORDS AND THEIR STORIES, in VOA Special English, was written by Jill Moss. I’m Faith Lapidus.

By admin 13 comments