Title:
How an Allowance Helps Children Learn About Money
Description: This is
a VOA Special English Economics Report.
See text below
Text:
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.For VOA Special English, I'm Alex Villareal. You
can learn more about economics with MP3s and
transcripts of our programs at
voaspecialenglish.com. And you can find us on
Facebook and Twitter at VOA Learning English.
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Hi. I
personally reviewed this video and found it appropriate for
the news section of English Global Group. This
is a Voice of America video which covers an interesting
topic in Special English. I would appreciate some feedback from both
students and teachers about this video. You can comment in
the window below using any of a number of different services
including Facebook, Yahoo, AOL, and Hotmail.
