EP3: How to Give an Allowance?

Financial Education with Our Child EP3: How to Give an Allowance?

Late one night, my husband came out of Jimin's room after putting her to bed. He looked serious.

"Honey, is something wrong?" I asked.

My husband sighed and sat on the couch. "I've been thinking about Jimin's allowance while putting her to bed. I think we might be doing something wrong."

"What do you mean?"

"We decided to give her an allowance in exchange for chores, right? Apparently, that might not be good for her."

I was curious. "Why not? Isn't she learning the value of work?"

My husband shook his head. "That's what I thought, but after looking into it, it seems that's not the case. If we give an allowance as payment for specific tasks, children might start expecting rewards for everything they do. They might not do things they should do as family members without associating it with money."

I thought for a moment. "When you put it that way, it makes sense. So what should we do?"

My husband showed me some information he found on his phone. "There's some advice here. It's better to give an allowance regularly, without conditions. And the amount should be based on the child's age and our financial situation."

"I see. But if we do that, how will she learn the value of money?"

"We need to teach that separately. We should explain and help her practice managing her allowance, the importance of saving, wise spending, and so on."

I nodded. "Then what about household chores?"

"We should teach her that chores are something she should do as a family member. Not connected to money. Instead, it's important to praise and acknowledge her when she does well."

We talked late into the night, devising a new allowance system.

The next morning, we sat down with Jimin to explain the new allowance rules.

"Jimin, we've been thinking about your allowance again," I started.

Jimin looked at us with curious eyes.

"From now on, you'll get 4000 won every Sunday as your allowance. You'll get this regardless of what you do or don't do."

Jimin's eyes widened. "Really? So I don't have to do anything?"

My husband smiled gently and replied, "That's not it. Household chores are everyone's responsibility in our family. You clean your room and help the family not to get money, but because you're an important member of our family."

"Oh..." Jimin nodded.

I continued, "And with this allowance, you'll learn how to buy things you need and how to save. We'll help you, so let's do this together."

Jimin thought for a moment and asked, "If I work really hard, can I get extra allowance?"

My husband and I exchanged glances. My husband answered, "That's a good question. In special cases, we might give you extra allowance. But that's not a reward for what you've done, but recognition for acting responsibly. Do you understand?"

Jimin nodded. "Yes, I understand."

This is how we started our new allowance system. I could see curiosity and a bit of worry in Jimin's eyes. I wondered if Jimin would adapt well to this new system and if she would be able to use her allowance wisely in the future. But I believed this would be an important first step in Jimin's financial education.

My husband and I smiled at each other. The journey ahead might not be easy, but it would be an opportunity for our family to learn and grow together.

Detailed Guide for Giving Allowance to Children

1. Regularity: Give allowance on a set date regularly.

Reason: Regular payments give children a sense of security and help them develop planning skills.

Method: Give allowance on the same day of the week or month.

2. Unconditional: Give allowance without conditions, not as a reward for specific actions or achievements.

Reason: If allowance is given as a reward for specific actions, children might expect rewards for all behaviors.

Method: Explain that allowance is for meeting their basic needs.

3. Amount: Set an appropriate amount based on the child's age and family circumstances.

Reason: Too much can encourage waste, while too little can lose the meaning of management.

Method: A common guideline is the child's age * 1,000 won as weekly allowance. (e.g., 10-year-old child = 10,000 won/week)

4. Management Education: Directly teach how to manage allowance, the importance of saving, and wise spending methods.

Reason: Teaching management methods is more important than simply giving money.

Method: Create an allowance journal together and explain the importance of saving.

5. Separate Chores: Don't connect chores with money, emphasize that it's a responsibility as a family member.

Reason: Chores are duties as family members and shouldn't be associated with money.

Method: Explain the importance of chores and set schedules together to practice.

6. Praise and Recognition: Reward with verbal praise and recognition when the child acts responsibly.

Reason: Emotional rewards instead of monetary rewards increase the child's self-esteem and sense of responsibility.

Method: Specifically praise and express gratitude when the child does chores well.

7. Flexibility: Extra allowance can be given in special cases, but explain that it's recognition for responsible behavior.

Reason: Exceptions are sometimes necessary, but they shouldn't become the rule.

Method: Give extra allowance only in special cases and clearly explain the reason.

8. Practical Opportunity: Provide opportunities for the child to manage allowance and make decisions directly.

Reason: Children learn more effectively through real experiences.

Method: Watch without intervening when the child decides how to use the allowance. Encourage that it's okay to make mistakes.

9. Communication: Regularly talk about allowance use, listen to the child's concerns, and give advice.

Reason: Open communication helps increase the child's financial literacy and form healthy money concepts.

Method: Have regular times to talk about allowance use. Listen without criticism.

10. Setting an Example: Parents should show healthy financial habits first so that children can naturally learn.

Reason: Children learn a lot by observing their parents' behavior.

Method: Practice budgeting, saving, and making wise spending decisions in front of the child.

It's important to adjust these guidelines according to each family's situation and the child's characteristics. Allowance education is a long-term process, so it should be practiced consistently with patience.

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