Allowances can be a fantastic way to teach children about money. But at what age do you begin and how much should you give per week? Also, what is your child doing to earn the cash?
Experts agree on some general guidelines:
#1 – When They Are Ready. You can’t begin an allowance until your child is mature enough to understand the value of what they are doing. A general rule is around age 8, but depending on your child it could be younger or you may have to wait until they are older and more interested.
#2 – Talk About it. You shouldn’t just rush out and hand out the cash. You need to spend some time talking about not only spending the allowance but saving it and donating some as well. This is a great opportunity to discuss philanthropy with your child and the importance of giving back. Set aside money each week that can be donated to a charity or cause that may interest or be relevant to your child.
#3 – Don’t Tie Allowance to Punishment. This is a big no-no. If your child needs to be punished choose another method to make your point. Take away a TV and computer privilege, not the allowance. Allowance money should be designed to reward specific behavior around completing designated chores or responsibilities.
#4 – Don’t Pay Them for Everything. Setting the table for dinner, doing homework, taking a shower, these are everyday activities that don’t deserve payment. You don’t want to create a monster by having to pay your kid for clearing the dishes. This is common courtesy after a meal. Be clear on your expectations with your kids – let them know what they need to be doing as contributing members of the family, which is different from what they do for their weekly allowance.
#5 – Pay them in smaller amounts. If they get a dollar for allowance, give them 4 quarters. If they get $5, give them 5 singles (or loonies and toonies for Canadian kids). For young children seeing money broken down into smaller amounts is often more exciting and motivating.
#6 – Save and then Spend – Let your child save toward a specific item. Don’t just let them run out and spend their weekly allowance. Have a goal and work towards it. Start saving for a month or more of allowance money and then go out and make the purchase. Your child will feel like they had to work for something and had to also delay instant gratification – just like in the real, grownup world.
#7 – Open a Bank Account. Take your child to the bank and if they don’t have an account in their name, open one. Each week when they get their allowance, you can deposit their money and they can see their balance grow.