There are thousands if ideas, blogs, articles, and people giving advice on how to give kids allowance. There are also tons of questions. When to start, how much, should it be tied to chores, etc.?
We have done the tough searches for you, talked to parents, and read the articles. This blog has collected the best of that information so you can feel confident that you are doing allowance right.
When do you start?
Giving children allowance is important because it teaches them about money. Obviously, you don’t want to start before they can even grasp the concepts around money and value. Most sources we checked recommending starting around 6. One source we found recommended starting after they could pass a test about the value of money. You could start by asking how many pennies, nickels, dimes, and quarters are in a dollar. Another said after they start getting money from the tooth fairy.
Generally, if your child starts asking you to buy them things and understands the basic value of money, it is probably a good time to start.
How much should I give?
There are many and varied opinions on how much to give a child for allowance. It is very important not to give more than you can afford. But if you can afford a lot, don’t give so much that they can buy everything they want. It is important for their learning to have to save and make tough choices about what to buy.
A common recommendation is to give one dollar for every year of age, every week. So if you have a six year old, give her six dollars a week. You can expect her to blow it for at first. She hasn’t learned saving, delayed gratification, or other money skills that you know, so give it time. You can also be there to give advice. For example, if she's been talking about a certain toy she wants, but she want to spend 5 dollars on candy. You can explain that if she spends 5 dollars today, she will only have one dollar left for the rest of the week and won’t be able to buy the toy she wants. She may still buy the candy, but she are learning to make choices.
Many parents give their children two or three jars or containers. The first jar is for spending, the second for saving, and the third could be for donations to charity or your church. When allowance is given each week, the designated money goes into each jar. At least 10% should go into the savings jar. It’s good to shoot for short term goals with the savings jar when they are little. Let them suggest a toy or game. They can save for a car or college when they are older.
Should I pay my child for doing chores?
There are different camps on this idea. One camp says that children should earn their allowance to avoid becoming spoiled. The other doesn’t think the children should be paid for participating in family life. They also think that allowance is a lesson on money. If the children aren’t incentivized by the money, they may just skip the allowance, and not do chores. Many parents compromise between these camps and give a base allowance whether they do chores or not. They give extra money for additional chores.
Do I have to let my child buy anything he wants?
What if your child wants to buy only cavity inducing candy, or fireworks, or something else you really don’t want him to? He may say, “It’s my money, I can buy what I want.”
It’s important to put some guidelines on their allowance. A good one, is that they can buy whatever they want, as long as it doesn’t break the house rules. Another is that they can buy what they want as long as it isn’t harmful. The candy is harmful to teeth or health, and fireworks may be against the house rules.
Consistency is vital for your child to learn from allowance. You should make sure to give the allowance every week at the same time. If your child asks for a toy or candy from the store after his or her allowance has been spent, you might tell them that it isn’t in your budget but they can save for it, or buy it next time.