So you’re warming up to the idea (maybe at your child’s pleading) of giving your child an allowance. That’s great! An allowance is a beautiful way to teach your children about the right and wrong ways to manage money. In today’s world especially, where poor financial choices and debt abound, wise spending is needed more than ever.
But where do you start? How much is appropriate for your child’s age? Should you make chores a part of the deal? Should you pay weekly or monthly? Here are a few things to consider:
This obviously depends on your child’s age. For a younger child, say 5-8 years old, a couple of dollars per week is probably plenty to allow them to purchase small toys, candy or save up for bigger toy items they’d like. For children ages 9-11, about $4 to $5 per week is adequate.
As your child gets older, however, and wants to go out with friends, buy certain brand named clothing, extra smartphone minutes or other extra “teen” stuff, you may want to increase this amount. A fourteen-year-old, for instance, might receive $30 per month, with additional opportunities to earn more for doing specific chores. This would cover his spending money, as well as a clothing allowance. He or she may have to set aside $15 or $20 per month to save up for a particular item, which will not only teach them how to save, but offer a lesson in patience, too.
Again, this depends on age. To a young child, one week seems like an eternity. In addition, by giving them a weekly allowance, you keep the monetary concept fresh in their mind. For an older child, perhaps twelve and up, a monthly allowance might be a better idea. Being paid a heftier amount less frequently, helps them allocate their wants and needs on a larger scale and gives them a bigger picture, preparing them for adulthood.
How should it work?
It’s always a good idea for your child to have regular chores he or she does around the house. But whether or not you make chores a stipulation for earning an allowance is up to you. In some families, a child is expected to do certain duties, such as keep his room clean, set or clear the table, wash the dishes, take out the trash and other things that are merely part of belonging to a family. But they delegate additional duties specifically for allowance purposes, such as cleaning out the garage, washing windows, or mowing the lawn. Lay out the rules before you begin so everybody knows what is expected.
How much say should parents have?
As difficult as it is for us to watch our kids make mistakes, trial and error is the way they learn. This is especially true when handling money. If an older child spends their entire weekly allowance in the first week, the last three weeks won’t be much fun, as they may have to stay home instead of going to the movies with friends. But, next month, chances are, they’ll be a little more careful.
Most experts agree that a child is ready to receive an allowance between the ages of five and seven. Hopefully, by introducing financial concepts at an early age, the principles on money management will be ones they will carry with them for life.