Allowing the Allowance

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Children need to learn how to earn, budget, and save money. Providing a consistent flow of income in the form of an allowance is a great way to help kids develop solid money management skills.

What is a good age for to start an allowance?

Most experts agree that when a child recognizes that money is exchanged for goods, it is time to introduce an allowance. In his book, Dr. Spock’s Baby and Child Care Dr. Spock advises that children are ready to start learning about saving and spending when they’re about 6 or 7.

Should an allowance be given for household chores?

It is generally not a good idea to tie a child’s allowance to tasks or household chores, asserts David McCurrach, Financial Advisor and founder of the web page, Kids Money. Hebelieves an allowance should be an entitlement. The child is entitled to a share of the family income as long as he is responsible and considerate of others, and assumes his share of household responsibilities.

How much money is enough?

Generally, the amount given depends on the child’s emotional maturity, but according to a Nickelodeon/Yankelovich Youth Monitor survey, the average allowance amounts in the United States are as follows:

  • 6 to 8 years olds – $4.80 per week

  • 9 to 11 year olds – $7.00 per week

  • 12 to 17 year olds – $16.60 per week

How often should an allowance be given?

Pay your child at regular intervals, it’s important to be consistent. Younger children can be paid as frequently as twice a week, but weekly is the norm. During the teen years, when expenses start to grow, consider paying monthly to cover the larger purchases.

Is it okay to supplement an allowance?

It is perfectly okay to provide children with regular employment to boost earnings and help save for big-ticket items, according to Good Housekeeping’sIllustrated Guide to Child Care. The important message this sends is “I can work harder for the special things I want.”

Kids can earn extra money by doing jobs parents might normally pay someone else to do, such as raking leaves, shoveling a driveway, or washing windows. Keep everyday chores like emptying the dishwasher, or making the bed, out of the equation.

What about a raise?

Consider giving your child a raise when expenses increase. Keep in mind that as they age, children should be expected to cover more of their own expenses.

How should the allowance be spent?

Grace W. Weinstein, author of Children and Money: A Parents Guide advises, “Once you have given an allowance, walk away from it”. It is now up to your child to decide how to spend the money. If it becomes apparent the money is being spent on items or activities that are directly opposed to family beliefs or to the law, make an exception and intervene.

Is it ever okay to give an advance?

The initial response is a resounding no! Beverly E. Tuttle, president of Consumer Credit Counselling Service of Connecticut, says: “It just invites the attitude that has made America a debt society”, and feels that the buy now/pay later mentality of our society is only encouraged by this behaviour. On the other hand, life can be unpredictable, and unexpected expenses do come up. These instances can be used as opportunities to teach children about borrowing and interest.

The advance should not amount to more than one week’s allowance, and should be paid back in a timely manner. Make a loan against future allowances, but not expected gift money. If a child repeatedly needs an advance, it may be a good idea to set a limit on how often a request for a loan can be made. This may also signal that it’s time to revisit the amount of the allowance, as well as to monitor spending habits more closely.

What to do about lost money

Ask a few questions before pulling out the wallet. Was the money taken to school to show off, after being expressly warned not to? Is losing things a habit? If, when, and how much money gets replaced will largely depend on the answers.

An allowance is a great tool to help prepare children for the real world. They now know that a responsible person spends money wisely, chooses debt only when necessary, and, most importantly, that saving is a priority. When children leave home at 18 or 19 they will have a basic understanding of how money works in our society, and hopefully will go on to learn how to make money work for them.


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