During this time of year, your children may be asking about giving holiday gifts to friends and family. Should you let your kids use their allowance or should you pay for them?
Here to answer this question is Dan Meader, CEO and founder of Allowance Manager, an app that helps parents and children keep track of their allowance. Meader says he believes children should save and spend their own money in order to gain a deeper understanding of the value of money.
Meader offers five tips for children who are interested in participating in holiday shopping:
Let your children spend their own money. This enables children to feel empowered by making their own decisions. This will prompt them to think about the value of money and what it can buy.
Personalize gifts. By understanding gifts should be bought for particular people and not just for the sake of buying gifts, children are taught to put more thought into their purchases rather than make an impulse buy. If it is larger purchase, they will learn that they will need to budget their money to save more.
Allocate 10% of an allowance. Every child has a varying amount of allowance they receive and should spend within their needs. Purchases should amount to 10% of an allowance as a rule of thumb.
Invest in financial learning apps. These help children take a step back and see an overview of their finances. Rather than trying to count the money in their piggy bank, they are given a digital ledger of the money they have and can calculate how much they will have to plan their purchases accordingly.
Read our Q and A with Dan Meader here.