Allowances

One of Paco's friends told him he didn't think allowances were a good idea. Why should kids get "free money"? They should learn to work for their money. Ale said that allowances taught kids how to manage their money. How much to save, how much to spend.

I asked Paco if his friend received an allowance. He doesn't. So how does he buy an afternoon snack or a movie ticket? His parents pay for it. The point of allowances, I explained, is not to give kids "free money", but to teach kids to manage their own money. Instead of paying for all their expenses, like his friend's parents do, we give them a modest allowance that they must manage. I agreed, though, that we are sometimes guilty of paying for too many of their expenses anyway, so that their allowance ends up being like free money. But we can easily correct that ;-).

We spoke a bit about the importance of saving for large purchases. For example, Ale mentioned that if he were to get a car, he would love a VW Beetle. I told him that a new Beetle costs $20K, not an amount he will accumulate with allowances and birthday presents alone. But some work and investing his savings carefully should get him well on his way.