Should You Give Your Children an Allowance?

Many experts believe that giving your children an allowance helps them learn money management at an early age. 

Parents frequently wonder if a child should be given a weekly allowance. Janet Bodnar, the deputy editor at Kiplinger’s Personal Finance, says “yes.” In an article on Bankrate.com, Ms. Bodnar stated, “Giving your kids an allowance it the best money-management tool you can use with your children.” 

Children are always willing to spend money and to spend it without end, when it is their parent’s money. When children are given their own money, they make their choices carefully and put more thought into their spending.  

How Much Allowance Should a Child Receive 

Many children who receive allowances are given a weekly amount. This amount will depend what you expect your child to buy with the allowance. For example, will they need to pay for clothes, birthday gifts, movie tickets and lunch? If so, you will need to determine how much money they will need to cover these expenses. If not decide what you want them to be responsible for and provide enough allowance for those items. If they spend unwisely or overspend, they will not have enough money left for activities. Be specific with your child and let them know what items they will be purchasing on their own. If they run out and do not have enough left, resist the urge to give them more. 

Understanding your family budget is also important in setting allowances. Don’t set it high enough so that you have trouble giving them money from week to week. Include allowances in your monthly expenses. 

In other words, there is no set amount that is universally right. Allowances can also be adjusted if you give an amount and find that it is not enough. It is more difficult, however, to lessen the amount of weekly allowances. 

Setting Limits on Allowance Spending 

Because you give your children an allowance, does not mean that your children have the right to spend their money any way they see fit. You are still the parent. If you would not normally allow your children to view an “R” rated movie or “T” rated video games, then they should still be off-limits, even with their own money. 

In addition, if you feel that a portion of allowances should be set aside for when your children need to purchase birthday gifts, to give to charity or for college, let them know this from the start and help them to set up a bank account so they can accomplish this goal. 

What Age Should Allowance Start? 

Many parents wait until somewhere between ages 9 and 12 to begin a weekly allowance. Parents may feel that children this age have begun to understand money enough to be able to handle an allowance. 

Some experts, however, believe that children as young as between 3 and 5 years old are old enough to start receiving an allowance. At this age they begin wanting material things and providing them with an allowance can help you to teach money management from a very early age. 

Chores and Allowance 

Although it is tempting to link doing chores around the house to an allowance, there are two reasons why some parents choose not to do so: 

1)      Children should be taught to contribute to the household without expecting a monetary award for doing so. Doing the dishes, cleaning up or taking out the trash are normal household activities and everyone should do their part.

2)      Teens often hold part-time jobs outside the house. If allowances and chores were linked, teens may feel they no longer need to contribute to the household if they are no longer receiving an allowance and making their own spending money. 

Children can be given certain chores to complete each week, vacuuming, dusting, taking out the trash or cleaning up after dinner for example. However, extra chores are also often used to help children make money. Some examples of this type of extra chore are: cleaning the car, raking leaves or organizing the garage.   

By Eileen Bailey

References:

All About Your Child’s Allowance, Lynne Ticknor, Bankrate.com

How Much Allowance Should Your Kids Get? Lending Tree

See Also:

Additional Parenting Articles

Family Finances