Giving your kids an allowance is one of the best things you can do for them (not just because they want to spend money either!). When your child gets an allowance, she learns how to budget. It’s in effect, her “income” for the week or month. Your child learns how to save for something she wants, and that she only has a certain amount to spend and then it’s gone. And, most importantly, you are not an ATM machine, constantly having to give your child money or buy things for her.
If you are a household that barely spends less than it earns each month (or maybe some months you even spend more than you earn), you cannot afford to have your children asking for money all the time. For your budgeting and peace of mind, you have to be able to predict how much you have to spend on your kids each month, and allowances allow you to do that as long as you are strong about saying NO to money requests when those items should be paid for with allowance money.
Tips for allowances for kids:
- Only give an allowance once your child is completely comfortable adding and subtracting (usually first, second or third grade).
- Do not give allowances for chores, children should do their chores because they are part of a household, not for money.
- Give your child about half her age in dollars until middle school. A 7 y.o. might get $3/week (half is $3.50, but change is a pain)
- Give allowance monthly, not weekly, when your child enters middle school(or at the start of high school for some children. Every child is different, you be the judge). Households run by the month and they should get used to budgeting for a few weeks.
- At middle school (or when you switch to monthly allowance) discuss including lunch money, etc. and spending money needs to arrive at a reasonable amount for both of you.
- Give a set allowance and if your child wants to earn extra money by doing chores NOT ALREADY expected of her, then you can pay extra for those extra chores.
- When you start giving allowances, make a list with your child of the types of purchases that should be made with allowance money, e.g. pizza with friends, special clothes, etc. Understand what your child thinks her expenses are (it’s eye-opening!)
- Say NO when your child comes to you for money or to buy something that’s on the allowance list once they are getting allowances (this one is hard, but stay with me here)
- Discuss saving and donating some of his allowance. Model that behavior by discussing how you save as a household and what charities you are involved with.
- Make sure your child has a bank account for her savings and help her go to the bank to make a deposit. The earlier children get used this, the better.
Giving an allowance is a tool in teaching another life skill to your child: managing money. Modeling is always the best teacher, which means your fears and anxieties about money can be picked up by your children. If you are fearless, prepared, and prudent with your money, chances are your children will be too.