Children grow-up so quickly. Before you know it, the day will come when you must allow your child to assert his financial independence and take him off an allowance.
A common age to do this is 16, when many kids get their first paying job. However, age is only one factor to consider. It’s important to remember children mature at different ages. So the question of when to take your child off an allowance should be based on his readiness to effectively earn and manage his own finances.
When your child is ready, consider the following tips on how to effectively take him off an allowance.
Provide tools and resources for financial success. Teach your child the fundamentals of budgeting and show him how to manage household finances. Allow him to control some funds so he can learn how to set priorities and understand the difference between wants and needs. As he gets older, allow him to pay for some of his own expenses, such as buying school clothes.
Hold a family meeting. Make sure all family members are aware of what’s going on and explain the reason for the change. It’s important that both parents are on the same page about how, when, and why to take your child off an allowance. Also, give your child an opportunity to ask questions and provide feedback.
Offer a severance package. Before taking your child off an allowance, make sure he is financial prepared for the road ahead. Make sure he has plenty of notice and clearly understands when the allowance will end. You might also consider giving your child two to three months’ worth of allowance to help get him started.
Expect your child to face challenges. Resist the urge to step in and help your child when he faces minor financial challenges. These are growing pains that most kids face and it produces valuable rewards when he learns to handle mistakes on his own.
Taking your child off an allowance can be intimidating as he will have to learn to live without financial support from you. With the right guidance and financial confidence, your child can learn to earn and manage money on his own. Visit MoneyBunny.com or the Youth and Money section of MoneyManagement.org for more parenting resources on teaching your kids good money management skills.