What to Do With Extra Money for Kids - 10 Great Places for Kids to Spend Their Allowance
January 1st, 2022
Giving your child an allowance is great but it creates two problems. First, the child is immediately faced with the temptation to spend every single dollar of their extra cash at the first opportunity. That means you have to teach your child how to manage his or her money.
Secondly, you are tempted to put strings on how your child should spend the allowance. But doing so would defeat the goal of giving your child the allowance in the first place, which is to make sure your child has money for what he or she wants.
But here’s the thing; all that money will have to go somewhere. Your best move as a parent is to teach kids (regardless of age) about money management through friendly discussions and suggestions instead of trying to impose your expectations on the child.
It's never too early to teach your child the importance of having some extra income at their disposal. While it may be too early to discuss more adult sides of personal finance such as forming a Roth IRA, thinking of retirement, or looking into a mutual fund, there are smaller lessons you can teach.
Perhaps you could get your kid to create their first savings account! This is a great way to teach them the importance of an emergency fund, or what it takes to save towards small financial goals.
While you may be tempted to think of them saving for the student loans to avoid debt repayment in their college student future (student loan debt is no fun for anyone), it's a good idea to make these initial financial goals something fun for them to enjoy with their extra savings.
This can encourage your kids to save their extra funds in their personal bank account to use on something they really enjoy.
If you are thinking of guiding your kids on what to do with extra money, here are 10 meaningful ways for them to spend their little extra money.
1. Garage Sales
A garage sale usually turns out to be a fun family activity and a good opportunity for kids to develop confidence in handling their money.
Choose a weekend and drive around your neighborhood in search of a local yard or garage sales. When you arrive, let the person in charge of the sales know that your kids are paying for anything they purchase by themselves with their good money.
You’ll be giving them a practical lesson in financial transactions if you let them handle their payments.
2. Online App Stores
Don’t want to clutter up your house with lots of toys and gifts? Online stores are the perfect place for kids to spend a part of their allowance without bringing home any physical item.
Your child might need your help signing on, depending on his or her age. If you want to guide them on what to do with extra money, go ahead and help them choose a few age-appropriate apps (maybe avoid social media and creating a social media account for now), such as sports apps, art apps, games apps, and more.
3. A Piggy Bank
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Children will naturally want to spend all their allowance unless you help them develop the habit of saving. It is important to let your kids view saving money as something they should do regularly.
Of course, it’s their money and you shouldn’t make them use it on your terms. But you can teach them the importance of saving by insisting they pay for some things such as going to the movies.
To make it a more attractive proposition, allow your kids to pick their own physical piggy bank themselves, rather than opting for their first checking account. They can choose from the many fun options available.
4. Resale Shop
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A resale shop is a perfect place for kids to learn about the value of money. If there are items, such as toys, movies, or books that are out of their budget, children may be able to afford them if they are used.
If you want the lesson to have more impact, start by taking your children to a full-price store first so they can have an idea of the prices of the stuff they want. Now, take them to a resale shop so they can appreciate the significant price difference.
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Getting your kids to spend their allowance on charity might not be a walk in the park, especially if they are very young. However, it can be a tad easier if you demonstrate it by setting an example of donating to charity yourself.
Talk to your kids about the different charities and their work. You can even take them to see things for themselves first hand since children learn better from experience.
Encourage your kids to set aside part of their allowance, and help them decide how to make their contribution to their preferred charity.
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Children will typically want to spend all their allowance money on material stuff. While that’s okay, it is important to remind them that they can buy fun kid-friendly experiences, too.
A visit to the zoo, children’s museum, aquarium, or science center can provide kids with a memorable experience. They can even opt for a cooking class for children or a pottery-making class. Older kids can also see a Broadway show.
Suggest the idea and help them select the experiences they can afford.
7. Stores With Coupon Policies
Whether it’s Walmart, Dollar Tree, CVS, Kroger, or any other store near you, take your kids to shop where they can get dollars back for items they buy.
It will be a life-long lesson on getting the most value for their money by saving with coupons. Remember to first sign up for the store’s coupon policy before shopping there.
8. Dollar Stores
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Dollar stores are some of the best places to take your kids if you want them to stock up on cheap items. These stores are typically found on Class-B or C locations, meaning they pay a considerably lower rent than other stores on Class-A spots. This explains why the same item in a dollar store can be a lot cheaper than it is in a grocery store.
They are usually packed with a wide variety of options, making it a great spot for kids to shop around and discover what to do with extra money.
9. Target Dollar Spot (Bullseye’s Playground)
The Dollar Spot at Target has a wide selection of quality items with many of them going for under $3 to $5. This makes it an excellent place for shopping within the average allowance for kids.
You can guide your children to spend their allowance on just about anything they want, whether they prefer toys or educational supplies. Don’t worry if you can’t find a Target in your area. The Dollar Spot is now available online.
Children will most likely need their parent’s help with spending their allowance on eBay. This works like a resale shop but it is an online version.
Buying things from an online resale store is a great way to guide kids on what to do with extra money, especially when you want them to learn the value of a dollar. Plus, kids will develop patience – a valuable real-world quality – because they have to wait for their purchases to arrive through shipping.