The amount of money you give to kids as an allowance is an often-challenged topic. Some experts say that you shouldn’t give kids an allowance at all. They posit that kids should learn at an early age that money has to be earned. Other experts insist, however, that giving children an allowance affords you an opportunity to teach children how to use their money. The learning opportunity is too important to be forfeited.
For the most part, I side with the idea that having an allowance is an important rite of passage that helps children learn how to manage their money. Given to the child correctly, an allowance teaches kids how to set goals for their money, how to save their money, and even how to make wise purchases with their money. The important thing, though, is to carefully steer your family’s allowance program.
Determining how much money to give your children is the first step in design your family’s allowance program. If you don’t give enough, your kids won’t have the opportunity to learn the lessons you hope to teach them. However, if you give too much, your kids won’t appreciate the idea of budgeting their money. Finding the right amount is quite a dilemma.
As a general rule of thumb, I like the idea of giving your children a weekly allowance equal to half of their ages. A pre-schooler, then, gets a couple of dollars each week to save for a toy or splurge on a treat. A middle-schooler gets enough money to go to the movies with a friend. The amount adjusts as the child gets older without anyone having to re-negotiate with the other.
Another important part of designing an allowance program is to clarify exactly what types of things you, as the parent, are going to pay for and what types of things your child will need to pay for out of his allowance. I still feel that paying for clothes and food is my job. However, if a child wants a particular brand of shoe that you’re not willing to shell out the extra money for, that’s a perfect opportunity for him to use some of his allowance to pay for the upgrade. Likewise, if you prepare meals at home for the family, but your child wants to eat at McDonald’s with his friends, he could pay for that meal because he chose not to eat the meal you prepared. Allowance should be used to cover a child’s extra expenses, not his basic needs.
Finally, you will need to decide if your allowance program includes chores. Again, this matter is something you will have to tailor to fit your family. One school of thought is that as a member of the family, your child should grow up expected to pitch in and do his share of the work to make your household run smoothly. Alternatively, some believe that making your kids do chores in exchange for an allowance allows them to develop strong work ethics.
I think the truth of the situation is probably somewhere in between these two ideals. You may not want to have to pay your child to make his bed. He should do that because it’s his bed. On the other hand, if your child is helping you with a special project, you may decide that it’s worth a little extra spending money. Just be certain that your child knows what’s expected of him and decide what works for your family.
So, the allowance debate continues. But, now that you know the basic points of an allowance program, you can determine how you feel about them and create a program that you can live with. Remember, however that no matter what you do, your child will still need guidance to learn how to manage his money and make wise choices.
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A terrific, simple, straightforward approach to determining the amount of allowance to give is David McCurrach’s Allowance Magic. It’s in an easy-to-read workbook format. He (and I) are proponents of not tying allowance to chores.