You can’t really teach your child about money until they actually have some. Unless you wait until they’re old enough to get a job, that probably means giving them some form of an allowance.
But if you give a child money with no restrictions, conditions or caveats, chances are you’ll just teach them how to buy $5 worth of candy every week. An allowance should be part of a broader approach to financial education, with the aim of instilling responsibility and patience.
If you’re considering whether or not to give your child an allowance, here are some things to keep in mind.
It Can Teach Them Financial Responsibility
Children who receive an allowance get hands-on experience in money management. They’ll learn the consequences of impulse spending and how to save for what matters. Nothing teaches the value of a dollar more than… well, having a dollar.
When I was six, my parents took me to Disney World for the first time. I was enamored with the souvenirs and merch, and I kept begging them to buy me toys and stuffed animals. They got me something small, but not the oversized Minnie Mouse plushie I was hoping for.
When I turned seven, I started getting a small allowance every week and immediately started saving for our next trip to Disney. I was so excited to buy whatever I wanted without my parents saying no.
As soon as we arrived, I realized how expensive everything was and why my parents only bought me a trinket the year before. I walked away without getting anything, proving my parents right once again.
Don’t Tie It to Chores
In his book, “The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, and Smart About Money,” New York Times columnist Ron Lieber says parents shouldn’t connect a kid’s allowance to their household chores.
Just like an adult doesn’t get paid for taking out the trash, your child shouldn’t get paid for contributing to the household. Tying an allowance to chores can backfire when you ask your child to do something extra and they expect to be paid more. Everyone has to do thankless chores once in a while, and children should be no exception.
Explain the Rules
If you’re just starting to give your kids an allowance, make it clear what they should use it for. Will you still pay for their baseball gear or will they need to buy that with their allowance? Will you buy them books and video games or should they save up for those purchases?
Your child should clearly understand their new financial responsibilities. If you expect them to pay for a prom dress with their own money, don’t tell them a week before prom. Give them adequate time to save up. You should also explain if birthday or Christmas gifts will change because of their allowance.
How Much to Give
Finding the right allowance sum for your child depends on their age, your budget and what they’ll use the allowance for. Most children between the ages of 4 and 14 receive somewhere between $3 and $12 a week.
You can also ask friends who have kids the same age to see how much they give.
About the Author
Zina Kumok is a trained journalist and has covered everything from professional sports to murder trials. Now, she specializes in personal finance and has written for brands and publications such as Mint, Investopedia and Discover. She paid off $28,000 worth of student loans in three years.
