Should I Give My Child an Allowance? How Much Should I Give Them?
It’s never too early to teach your kids about money. I wish I had learned about the ins and out of money at a much younger age. Growing up, my parents never talked about money in front of me. It was one of those subjects you didn’t talk about with anyone. I had to learn most of my money lessons the hard way.
There are two major schools of thought on paying your children an allowance; there is paying for chores and not paying for basic chores. Let’s do a deeper dive into those options.
Option 1: Pay Allowance for Chores
Paying an allowance when children complete chores teaches that we all work for money. If you don’t do the work, then you don’t get paid. This does teach a real-world lesson. However, the flip side is that many believe you are paying kids to do chores that they should be doing anyway. What happens if your child decides they don’t need the money this week and won’t do chores? I don’t want this to add stress to your life.
Option 2: Pay a Flat Allowance Each Week
The second school of thought is to pay a flat allowance each week. This requires that basic chores be done as a part of the family. This gives children the security of real money each week. However, many believe it teaches children to be entitled because they have money handed to them without work.
Option 3: A Middle Ground
There is a third option that is a combination of the two approaches. You pick and choose the best parts of both options for your family. You can build a plan like basic chores are required with a set allowance, but children have the option to earn extra money by doing extra chores.
Sit down as a family and create a list of extra chores. Here are some ideas: washing the dog, raking leaves, washing windows. Then, when your kids want to earn a little extra money, they can choose an extra chore from the list. Make sure you let your kids know what chores you expect them to do and make sure you keep having the conversation as they get older. This also gives you a reason to continue the money conversation. Make sure you don’t use allowance as a punishment. This is their first experience with money, and we want it to be a positive one.
How Much Money Should I Give for Allowance?
The last part of the conversation about allowance is how much is appropriate. Some experts say $1 for each year of age, but this is a very personal decision based on your financial situation. When you are setting an amount, try to stick to that amount and pay your children in cash so they get used to handling money.
When you start giving your children cash, this is the perfect time to start the discussion of saving, sharing, and spending. Talk with them about saving for a special item, and about putting some of their money away for sharing with others, maybe they have a special organization they would like to help. I love the idea of three different containers so they can see the money inside, and watch it grow which is something we all love to see.
More Resources to Help You Talk to Your Kids About Money
The Consumer Financial Protection Bureau website has Money As You Grow activities to help you start the money conversation with your children, starting at age three. They have great games and activities to help you make learning fun and educational. You can print games and get ideas for starting the conversation based on your children’s ages. With small children, you can start by identifying different coins. With teenagers, you’ll think about buying a car and understanding credit cards. It is all free!