How Much Allowance Should Your Kids Really Get?

p_101711056Giving a child an allowance is a great way to teach the child how money should be handled.  As soon as your child starts asking about money it’s time to start with an allowance.

Some experts recommend starting an allowance at anywhere from fifty cents to one dollar for each year of the child’s age.  This means a child of eight would get a weekly allowance of either $4.00, $6.00 or $8.00. As the child gets older the allowance goes up.   The amount of money you decide to give your child as an allowance will, of course, depend on your family financial situation.  Another way to determine an appropriate amount for an allowance is to figure out how much you normally spend on discretionary things each week for the child.  You want the child to be able to purchase some items, but you don’t want the child to have so much money he becomes overbearing and selfish.

When your child wants to buy something and does not have enough money he needs to learn to save to accumulate the amount needed.

When you give a child an allowance he needs to learn when that money is gone he is broke until the next allowance.  Do not advance funds against next week’s allowance and do not finance his purchase after he has already spent all his own funds.

Be sure to give your child his allowance on the same day each week so he knows he can depend of those funds.

Determine what is to be covered by the allowance.  Usually this is some snacks or toys or books and as the child ages the allowance might include things like a movie or fast food lunch.

Children should be taught their entire allowance is not to be spent.  Instead the funds should be divided between spending, saving and giving.  This pretty much mirrors an adult budget and is good training for later years.  Many parents have found it works to divide the allowance into three parts, one-third each for spending, savings and giving.

It’s good to teach the child to give to someone who is need.  Let your child determine the charity where he wants to donate funds.

Saving is important and the sooner your child learns the value of saving some money the better for him.  If a young person reaches the twenties with the idea every cent he receives is for spending his financial future will look bleak.

When your child reaches the tweens giving a clothing allowance is a good idea if you can afford it.  Decide on the amount and let the child (with your guidance) determine how the clothing allowance should be spent.

Some parents tie an allowance to household chores.  This is not a particularly good idea.  Children need to learn everyone in the family is expected to do chores without expecting payment.

Linking chores and the allowance may backfire.  Perhaps there will be a time when the child has enough money and says he doesn’t need to do the chores since he doesn’t need that money.

It’s okay to pay a child to do a chore that is not normally expected of him.  When your child wants money over and above his allowance encourage him to find a way to work for it.  Maybe he can cut lawns or walk the neighbors dog.