As new parents, we constantly have to make big decisions regarding how to raise our son.
One of the things on my mind as of late: When should we start an allowance for him?
I thought about what the purpose of allowance should be. I don’t want to simply give him money, simply so that he can go buy something without asking me; I want him to learn how to properly use money.
With that in mind, I would like to start giving him an allowance as early as three years old. By this age (and with Daddy’s help) he should be old enough to recognize what money is, and know the difference between a penny and a quarter. It may not be a huge amount; we’ll probably start with $1 per week. While he’ll be tempted to spend it on candy, I will teach him money management at an early age and open up a bank account for him.
Similar to government programs like the RESP and TFSA, I’d be willing to reward his saving by providing an incentive. Maybe for every $1 he saves up for a toy he really wants, The Bank of Mom and Dad will match his contribution with another $1. Over time, this can help teach our boy that he can either have instant gratification (and nothing to show for it), or he can save up and double his money towards something he’s looking forward to affording soon.
Learning about money is an important skill in life, and these early years are the first stage in that learning process – and my wife and I want to make the most of it!
Tom Drake is the owner and head writer behind Canadian Finance Blog and also works as a financial analyst for a major retailer. Tom and his wife Amanda welcomed their beautiful baby boy Christian in October of 2009. To read more of Tom’s posts, subscribe to Canadian Finance Blog’s RSS feed and follow @CanadianFinance on Twitter.
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