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Giving your children an allowance is a great tool to help teach financial responsibility and prepare them to deal with money in the real world. After determining that your children are ready for an allowance, it is important to sit them down to discuss the amount, frequency and what is expected of them. Below are some common questions about allowances:
Should I give my child an allowance?
If possible, financial experts recommend that you provide an allowance to your children. It allows them to learn firsthand how to manage money. They are forced to make choices about what is most important to them. And the lessons they learn from their experiences and mistakes are at a time when the cost is minimal. Children tend to appreciate their belongings more when they must use their own money to purchase them.
When should I start giving an allowance?
There is no set age or time that your child will be ready for allowance. You can make that decision when they show an interest and understanding of the concept of money. Parents usually report beginning an allowance somewhere in the range of 6-8 years old.
How much money should I give?
One approach is to give your child one dollar for each year of their age, however, there is no strict guideline. There are a couple factors that can help you determine the appropriate amount to start with. How much do they contribute to the household? Do they routinely assist with chores, babysit younger siblings, etc.? The other factor is based on the amount of purchases or expenses they have. Sit down together and make a list of everything they are expected to buy themselves, such as clothes, music, movie tickets, etc. Make sure the amount can fit comfortably in the family budget.
How often should I give the allowance?
Some parents pay their children when they get paid, which may be every other week or once per month. However, once per week is the most common and allows children to practice budgeting on a smaller scale.
Should an allowance always be tied to chores?
If you expect everyone in the family to contribute to the household chores, then do not tie chores to allowance. The purpose of an allowance is to teach money management, whereas chores are a family responsibility. You do not want your child expecting to be paid for every dish washed, carpet vacuumed or bed made.