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Allowances

  • January 30, 2017
  • By: Greenpath Financial Wellness

Giving your child an allowance is a great tool to teach them about money. When you think your child is ready for an allowance, sit down and discuss how much they’ll get, how often, and what you expect in return. Allowances can help children develop the tools they will need to manage their future finances.

Here are some common questions parents ask about allowances.

Should I Give My Child an Allowance?

Finance experts recommend giving a child an allowance whenever possible. It gives children first-hand experience with money. They learn the rewards of careful spending and saving, and the risks of making bad spending decisions. And those risks are a lot smaller than they will be later in life! Kids also appreciate things that they are able to buy with their own money.

When Should I Start Giving an Allowance?

There is no set age when your child will be ready for an allowance. A basic understanding of the concept of money, and some simple math and counting skills help. Many parents start an allowance in the range of 6-8 years old.

How Much Money Should I Give?

There aren’t any strict guidelines. Some parents choose to give one dollar for each year of a child’s age. Other parents base their kids’ allowance on work they do around the house — like cleaning, lawn and garden chores, or babysitting younger siblings. Some parents put their kids in charge of paying for some of their own expenses — like clothing, music, or tickets to movies or amusement parks — and set the allowance based on that.

Whatever amount you decide on, keep in mind that it will become a regular expense for you to consider in your family budget. So make it work for you and your child.

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. But a weekly allowance is the most common. It helps kids learn budgeting and planning on a small, easy scale.

Should an Allowance Always be Tied to Chores?

If you expect everyone in the family to contribute to the household chores, then don’t tie chores to allowance. Allowances are for teaching 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. But you might choose to provide payments for special projects or chores and only happen once in a while — like raking leaves, or helping to clean out a garage or basement.