Use a regular allowance to help teach your kids the value of a paycheck and how to handle their money
Too many people see their paycheck come and go before the money even hits their bank account. One of the best lessons you can teach your kids is how to manage a paycheck so it lasts longer. Setting up their allowance for regular intervals and making them budget their money is a great start.
Today’s essay is by Aimee Veillette, a student at the University of Arizona. She shares how budgeting her allowance as if it were a paycheck helped to learn money management.
Check out Aimee’s story and please share on social media. The most-shared essay on how parents can teach their kids about money will win our $500 personal finance scholarship, announced August 31st!
Looking for more ideas on teaching you kids about money? Check out this huge roundup post of 36 expert ideas on teaching kids money saving tips.
Learning How to Manage a Paycheck
Growing up, my parents did a wonderful job of preparing me for the “adult world” full of loans, stocks, budgeting my money, and making money.
My father is in business so it came naturally for him to teach me those kinds of things. Once I could start understanding money, how to spend it and save it, he gave me a biweekly allowance. These were set up biweekly because that is how often most jobs pay their employees. I would have to manage my money so I would have enough to last me the two weeks, if I spent that money fast there was no way I could get more and I would have to wait until the next “paycheck.”
This helped me with budgeting a lot to get what I wanted but to save for if an emergency came up. Then when I started to drive I really knew how to made sure I had enough to make sure I had enough for gas to get me where I needed to go. I believe this really helped me for once I got a real job and I stopped getting the allowance because I knew how to live within those two weeks of what I had.
Eventually I learned enough about making sure I had enough for things and was able to save small amounts each week. Without him really doing much, I was able to learn myself about saving money, paying my gas, budgeting for things I wanted, etc. I believe this also helped me appreciate money more.
Since I did not get money whenever I wanted I had to cherish what I had in that time. It also made me work harder to save so I would always feel comfortable if I had to spend a little more one week.
Want your kids to learn the value of hard work? Check out this directory of work from home jobs you can start today!
Learning the Set-it-and-Forget-it Method of Investing
Eventually, when I saved enough money he set me down to explain about stocks and what they do. We talked about some companies that would be good, but in the end he let me chose what I wanted. I still have them today! Once thing he told me was not to stress and almost “forget” about them. That way you don’t freak out because they will naturally go down but as the stock market it is they will go back up.
My father was always there to help me and answer my questions, but I think the way he set up my allowance and let me make my own choices helped so much. Now, years later and on my own in college paying for my tuition myself and working hard to not have any student loans, I use these lessons every day. I’ve learned how to live without what I wanted in order to get something I need.
Take the guesswork out of investing with a robo-advisor like Betterment. It’s like having your own financial advisor at a fraction of the cost!
Also that money does not grow on trees, I have to earn it and be responsible with it. There will never be money just there and given to you if you do not earn it. If you appreciate money more than you are more likely to be more careful with.
What my dad taught me when I was younger definitely started good habits that I will continually use and that I hope to implement in my own child’s life. Personal finance is one of the post underrated topics right now but it is so important because there will be one day that you will be on your own and you do not want it to hit all at once.
I want to thank Aimee for her essay on how to manage a paycheck and handle her money. Be sure to support Aimee by sharing the article through social media and check in August for the winner of the personal finance scholarship.
About the Author
Joseph Hogue is a financial expert and investment analyst. After serving in the Marine Corps, he started his career investing in real estate before becoming an investment analyst for some of the largest private investors. He's appeared on Bloomberg and on CNBC as an investment expert and has published ten books in personal finance. Now he helps investors reach their financial goals and invest in the stock market with some of the same advice he used when working for the rich.