May 22, 2015 17:34 UTC

Business

How an Allowance Helps Children Learn About Money

Three sisters in Ohio wait as their parents count out their allowances and look over the list of the children's chores
Three sisters in Ohio wait as their parents count out their allowances and look over the list of the children's chores

Multimedia

Play or download an MP3 of this story


English teachers: Download an activity worksheet

This is the VOA Special English Economics Report.

Many children first learn the value of money by receiving an allowance. The purpose is to let children learn from experience at an age when financial mistakes are not very costly.

The amount of money that parents give to their children to spend as they wish differs from family to family. Timing is another consideration. Some children get a weekly allowance. Others get a monthly allowance.

In any case, parents should make clear what, if anything, the child is expected to pay for with the money.

At first, young children may spend all of their allowance soon after they receive it. If they do this, they will learn the hard way that spending must be done within a budget. Parents are usually advised not to offer more money until the next allowance.

The object is to show young people that a budget demands choices between spending and saving. Older children may be responsible enough to save money for larger costs, like clothing or electronics.

Many people who have written on the subject of allowances say it is not a good idea to pay your child for work around the home. These jobs are a normal part of family life.

Paying children to do extra work around the house, however, can be useful. It can even provide an understanding of how a business works.

Allowances give children a chance to experience the things they can do with money. They can share it in the form of gifts or giving to a good cause. They can spend it by buying things they want. Or they can save and maybe even invest it.

Saving helps children understand that costly goals require sacrifice: you have to cut costs and plan for the future.

Requiring children to save part of their allowance can also open the door to future saving and investing. Many banks offer services to help children and teenagers learn about personal finance.

A savings account is an excellent way to learn about the power of compound interest.

Compounding works by paying interest on interest. So, for example, one dollar invested at two percent interest for two years will earn two cents in the first year. The second year, the money will earn two percent of one dollar and two cents, and so on.

That may not seem like a lot. But over time it adds up.

And that's the VOA Special English Economics Report, written by Mario Ritter. We invite you to share your family stories about getting or giving an allowance. Write your comments at voaspecialenglish.com -- where you can also read, listen and learn with our programs and English teaching activities. I'm Steve Ember.

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Learn with The News

  • Fiery Cross Reef, Spratly Islands

    Audio China Warns US Spy Plane in South China Sea

    China's navy is reported to have issued eight warning messages to a U.S. military spy plane over several man-made islands. Boats with Rohingya migrants accepted in Indonesian waters. U.S. and Cuba continue talks toward diplomatic ties. More

  • Audio Google Self-Driving Car Heading to Public Streets

    This summer, the latest version of Google's self-driving car will make its first appearance on public roads. The two-seat vehicle does not need a gas pedal or steering wheel. The prototype can drive, brake and recognize road dangers without human involvement. More

  • Audio In the US Senate, Heated Debate Over Catfish

    Lawmakers in the U.S. Senate are debating the Trans-Pacific Partnership. But, the catfish, a popular farmed fish in some southern states, has caused a large share of the argument. Republican Senator John McCain criticized a measure calling for increased U.S. government inspections of Asian catfish. More

  • Video Limited Mental Health Services Being Offered in Cambodia

    Because few students study psychiatry in the country, experts do not expect that will change anytime soon. Only six students are in the three-year-long psychiatry course, and the government spends just $1 million a year on mental health care services. | As It Is More

  • South Korea Koreas UN Chief

    Audio North Korea Cancels Ban Ki-moon Visit

    The North Korean government has canceled a planned United Nations visit to the Kaesong Industrial Complex. The cancellation came just a day before UN Secretary-General Ban Ki-moon was to visit the industrial center, where 53,000 North Koreans work. More

Featured Stories

  • Discover Debate

    Audio Successful Debate for New Learners and Large Classes

    Many students of English engage in debate as part of their training. In Part Two of our Successful Debate series, we learn the kinds of debate topics that work well for English learners. An expert shares tips for organizing a debate in a large class and for answering arguments. More

  • Nina Marranca looks at her phone, June 25, 2013.

    Audio Deaf-Blind Woman First to Use Braille Phone

    New technology allows deaf and blind people to use the telephone. The tests are underway in Australia and the U.S. It could help end isolation that people who cannot see or hear say they feel. Learn about this exciting new technology as well as words like "Braille" and "parallel testing." More

  • Video Resounding Earth: Creating Music from Metal

    "The title “Resounding Earth” on the one hand, we are talking about resounding earth. The earth is full of metals that all of mankind has turned into instruments. We are going to play them from all around the world together on one stage." More

  • Audio Common French Words in American English

    English is loaded with French words. Even if they mean something bad they sound so good. So read on to learn how to say them properly. Pictured here, French Actress Michele Morgan poses in a bathing suit at the 1st Cannes Film Festival in Cannes, France in 1946. More

  • Audio Everyday Grammar: Problems with Pronouns and Gender

    The English language is changing to meet the needs of online communities and a quickly changing society. Do we need new pronouns to talk about a person whose gender is unknown? It’s common now to hear that “Everyone has their own opinion” on this issue. More

Practice Your Writing

Confessions of an English Learner blog
Confessions of an English Learner blog

 

 

 

Tell us About Our Programs