Allowance for kids
Creating an allowance for kids is a perfect way to start teaching
them to manage cash at a young age. Having their own funds and
making decisions about what to spend it on provides a good basis for
teaching management skills. Figuring out the right amount for
kids can be a tough decision. There are many factors that come into
play: your own income, how much your children reasonably need each
week, how much their friends get, and so on. These are all factors
you need to weigh heavily to determine how much you should them, and
how often. You’ll also need to think about what your children need
to do in order to earn their allowance.
Determining the Right Amount of Allowance
There really is no “right” amount of allowance for kids because
there are so many variables involved. Age is one of those – younger
children should have a smaller amount than older kids as a general
rule, but if you’re giving different age groups different amounts
within your own household, you’ll need that difference to be
reflected in the difficulty of the chores
If children are given different amounts based on age even though
they do the same chores, it’s a recipe for jealousy. $1 per year of
age each week is a formula often recommended and this is simple
enough to work in many scenarios (so a 5 year old would get $5 per
Ask around to find out how much other parents are giving their
children and try to avoid giving yours much more or less than what
their friends get – again, this can cause social problems.
Of course, your own income is also a factor. Don’t feel like giving
your children cash should be a burden on your own finances.
Weekly Vs Monthly Allowances for Kids
How often you give your children their allowance is a decision
that’s largely up to your own taste, although there are some
advantages to a monthly allowance in terms of teaching financial
habits. If they are older and you want to introduce them to the idea
of sticking to a budget, a monthly allowance is a great way to do
this. That way, if they spend their money impulsively, they run out
quicker and have a long wait until their next pay day. This helps
them learn the hard way to be sensible with their spending and to
save for a rainy day.
Using an allowance
will help children keep track and see the results week
by week. You will need Adobe Reader to open and read this
Earning the Allowance
It’s very important that the child should do something in order to
earn the allowance – it shouldn’t simply be handed over for nothing.
This teaches two important concepts.
- It lets your child know you won’t always be there to give them
cash any time they need it.
- It teaches them that money never comes for free – it always
comes in exchange for something, whether that be doing work or
selling a product or service.
If they forget to do a chore
do it poorly, or complain excessively while doing it, tell them you
will either deduct it from their allowance or let one of their
siblings do it for them. Then make them pay that sibling from
the allowance they receive that week or month.
Making an allowance for kids doesn't need to be a hard thing to
develop. Even with very young children, you can have them help you
with a basic household chore – even if they aren’t really helping,
they should feel like they have a duty to fulfill in exchange for
~ Learn about using a chore
in correlation to your kids allowance and/or download free
See details on our Teaching
Kids about Money Ebook
for more lessons on banking, checking
accounts and credit cards as well as more money
designed to teach kids basic concepts and using cash
in everyday life.