Parents have a lot of important decisions to make with regard to their kids. One decision that’s sometimes overlooked, although still important, is whether or not to give an allowance.
There are plenty of pros and cons to giving your kids an allowance. Establishing a system for an allowance may not work for every family, so here are some things to consider when deciding if you should give one to your child.
Pros of Giving Your Kids an Allowance
There are many benefits to giving your children an allowance. Some of these benefits include:
- An allowance can teach kids about finances, responsibility and the consequences of poor financial decisions. In 2017, Champlain College’s Center for Financial Literacy graded all 50 states on their attempt to produce financially literate high school graduates. Only five states received an “A” rating. Therefore, anything you can do to enhance your child’s financial knowledge is a win.
- If the allowance is tied to chores, kids learn the relationship between work and pay. Helping your child understand the correlation between work and reward will set them up for their future careers.
- It gives kids spending money for non-essential items such as toys and video games. This way, they don’t always have to ask you for money when they want something.
- Using an allowance as an incentive motivates kids to get their chores done.
- If you use an allowance to reward your kids for good grades, it could help them get into a better college or even receive scholarships.
- If you require donating as part of your allowance system, this can teach your kids the importance of giving to those who are less fortunate.
Cons of Giving Your Kids an Allowance
Even though an allowance can be a great teaching tool, there are some downsides. Some of these downsides include:
- An allowance may undermine the importance of contributing to the family. Your kids may get the perception that duties always deserve a reward instead of simply doing their share for the family.
- Paying kids for doing chores teaches them that working for money isn’t always fun.
- Kids may not be motivated to do their chores when they don’t need the money or they have saved up enough.
- It may be challenging to give an allowance if you are on a small budget but have a large family.
- An allowance may open the door to kids making poor financial decisions when spending their money.
What Age Should You Give Your Kids an Allowance?
If a parent decides the pros outweigh the cons, at what age should a kid begin receiving an allowance? This may depend on the development of the child.
The child-development experts behind Sesame Street have determined that children as young as 3 years old understand the difference between wants and needs. Therefore, this may be a prime time to start giving your children an allowance.
If you feel as though this is too soon to start giving your children an allowance, you may consider starting once they begin to lose teeth. The monetary reward for losing teeth may be a good intro into a new reward system.
Every child learns at a different rate. Determine what you’re comfortable with. Remember: There is no right answer.
How Much Allowance Should You Give Your Kids?
Once you decide to give your kids an allowance, the question becomes how much? A popular way to determine the amount of money earned per week is the age of the child. For example, if the child is 7, maybe they could receive $7 per week. Then as they age, you could increase their allowance amount.
Another philosophy is to give the child half of their age. This allows the parents and children to ease into the process of giving and receiving an allowance every week.
You could also to base your child’s allowance off the complexity of the task or chore they complete. Each chore could have a different value. Simple chores would pay out less money, while more difficult chores would pay out more money.
Other parents choose to base their allowance on their child’s grades. It’s important to be clear about the requirements and what grade deserves a monetary reward. An example would be to reward your kid for every “A” they receive on a test or every “A” they receive on their report card.
In the end, it’s fairly simple. If the child meets the predetermined requirements, they receive the agreed upon allowance. If they fail to meet the predetermined requirements, they don’t get the money. Your decision depends solely on how much the parents are willing to give or is financially feasible.
Methods of Giving Your Child an Allowance
After you’ve established an allowance amount and requirements, it’s time to decide how you want to distribute the funds. One method suggests you put the money in a jar or a piggy bank. This method helps your children grasp the concept of putting the money away themselves. It also allows them to physically see their funds grow over time.
Once your child gets the hang of depositing their money and watching it grow in a jar, you may want to consider using additional jars for spending and donating. Then your children can put a designated amount in each jar. This process gives them the responsibility to manage their own money and save for items they desire. It also teaches them the value of savings.
You could also decide to use an app to manage your child’s allowance such as BusyKid or iAllowance. These apps modernize and automate the process. Some allowance apps will give your child the opportunity to spend, save and donate to their favorite charity. This is a similar concept to using the jars.
The Bottom Line
Every family is different. Determine what may work for you and your family. Establish a clear system and guidelines. There is no one right way to give your kids an allowance.
What do YOU think? Should kids get paid an allowance? Why or why not? Let us know in the comments section below!
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