Allowance is certainly the finest of tools parents can use to teach kids about money and financial responsibility. Your young ones should have flexible funds to spend as they see fit. You can teach him or her some important money lessons by giving certain allowance.

While you do, it’s also vital to explain that an allowance isn't the money a child earns for doing chores. Tell them that it’s a part of your saving that you are giving to them to manage in a better way. The most important advantage of an allowance is learning to build up independent thought. Expect your kids to do some unexpected things with their money, but allow them to make mistakes as only then will they learn the right things. However, don’t rescue them with more money. Help them work via their own solutions.

Here are some of the vital tips by which you can teach them financial responsibility with the allowance as given:

1. Teach charity at an early age
Teaching them the art of philanthropy from an early stage would be very beneficial. Make your child spend some percentage of his allowance in doing some charity Encourage kids to participate in clothing, or toy drives for charities. Help them to retort to natural disasters, like earthquakes, by donating money to help.

2. Teach saving at an early age
It's vital to put something aside for the future as you never know when an emergency strikes. You know it very well but child also needs to be taught the importance of saving. Teach him that saving and charity should take place before the money is spent on something unwanted, for instance buying a new stationary when he already has one. It would be great if you can fix certain amount that your child needs to save every month.

3. Encourage an entrepreneurial spirit
If your kids have a special goal, persuade them to find ways to earn the essential funds. For instance, if it is anyone’s birthday in the family and your child has planned to buy a gift on his own, tell him he can do so by helping in some of the daily chores in house. Don't go on creating needless jobs just so they can meet the goal. That would be same as giving them the money.

4. Teach them the art of working with their budget
Whatever budget you assign to them on a monthly basis, your child must be made to abide by the same. Teach him how to use the given money in a planned way so that all his needs are fulfilled and he even gets to save something.

5. Never reward good behaviour with material gifts
Goodness is a reward in its own. Your appreciation and words of praise should be adequate. Paying for good behaviour leaves parents open for childish blackmail. We are sure you won’t like to hear, "I'll stop crying if you buy me a new toy," or "I'll come not eat if you don’t get me a new play station".

6. Teach keeping a track
Simply knowing where the money is going is a big step forward in your child's money management skills. Make him or her use a notebook to keep track of the money. This will help your child know if the money is being spent wisely.

7. Making the most of savings
While teaching your child about the importance of saving also teach him that saved money must be used for something very useful. If you don’t teach them this, it might be used for something as insignificant as eating out or buying something needless.

Teaching kids financial responsibility can be a stimulating and fun-filled experience. It's not always undemanding, but when parents are steady, the rewards are infinite.