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Your Child & Money (I)
( Parent as Investor )
Dec 1998 Alan S.L. Wong

Your Child & Money (I)

We will look at this topic from different angles - parent as investor, child as saver, child as consumer and child as giver.

You the Parent As Investor

  1. How Much Allowance to Give?

    All parents of school-going children must face the question, "How much allowance should I give my child?" There is no right or wrong amount. Some factors to consider are the following:

    1. The allowance should be big enough to cover the intended expenses (c.f., Prov. 30:8-9).

      Most parents give the allowance for a snack and a drink during recess. Go and check out the prices at the school canteen. The prices of food and drinks are usually much lower than those outside the school.

      Naturally, if the child has to take public transport, then the allowance should cover the MRT and bus fares (unless the child is using a Giro farecard and you are responsible for the topping up of the monetary value in the farecard).

    2. The allowance should also be small enough to entail opportunity costs should the child choose to use the allowance for other purposes such as buying a gift for a friend.

      In other words, the child must give up a drink or snack so as to set aside the needed money. This sacrifice will not be detrimental to the child's growth or health as most children would have taken their breakfast or lunch before going to school. Moreover, the sacrifice adds value to the giving of the gift.

    3. The period for which the allowance is to cover.

      Naturally, a weekly allowance would be bigger than a daily allowance.

      Presently, we give our primary school children a daily allowance because we think they cannot manage a weekly allowance, at this age.

      Later, we would have to give them the responsibility of managing a weekly (and then monthly) allowance. In the beginning, they may blow their weekly allowance early in the week and be confronted with "Money No Enough" for the rest of the week. But that is how they are going to learn ... by mistakes. Let them face the consequences ... don't bail them out by giving them more money.

    4. How much you can afford Don’t be pressured by your child when he comes home and tell you what his classmates are getting. If appropriate, explain the family budget in a way that he can understand.

      Also assure him that you love him as much as the other parents who give more to their children. Or tongue-in-cheek, ask if he would like to change parents ... do this only if you are sure that you child is secure in your love.

  2. Once Given, Twice Owned?

    Once the allowance is given, does the parent still own the money? Should parents dictate how the money is spent?

    I believe that the allowance once given belongs to the child. The child has the right to spend it in the way he likes.

    However, future allowance is a privilege, not a right! It is a privilege that can be taken away if the child does not know how to use the money well. As parents, we have the responsibility to guide our children in making wise decisions in spending. If your child spends the allowance on candies or unnecessary stationery, explain the purpose of the allowance. It's okay to splurge or indulge occasionally but if the unwise spending persists, reduce or remove the allowance.