Children and Allowance

 

The other day a friend asked me what I thought about giving children allowances. I thought perhaps some of you were wondering about this as well.

 

There are two different ways to approach allowance. Children can “earn” their allowance by doing certain chores; or children automatically get a set allowance. I prefer to give a set amount per week to each child. My goal is to teach children how to handle money. If they only get money for doing chores some kids will never have any money! Personally I believe it is important for each child to have a job, they do this job because they are part of the family and in a family we all work together. I believe having a job (pick up toys, make bed, take out the trash…something age appropriate) gives a child a sense of worth and belonging.

 

I suggest giving an allowance based on the age of your child, say $1 a week for each year (five year old gets $5, 10 year old gets $10). On the same day every week (say Saturday) give your child their allowance in cash. You decide what the money is to be used for and clearly communicate that to your child. If you value giving to church or a charity now is the time to begin training your child, i.e. have them give away 10% of their allowance. Decide if the money is to be used to buy birthday gifts when they go to a party, extra snack at school, try to think through every scenario and clearly let your child know what they will be responsible for now that they have money.

 

Now your child has their own money, when you go to the store and they “have to have something” they can use their own money to buy it. They will discover what a dollar will buy. They will learn that when they spend all of their money at once they won’t have anything for the rest of the week. If they want something “big” they will learn to save their money until they have enough to buy it. This gives them the opportunity to think about something before making a “big” purchase, to decide if it is really something they want or just an impulse.

 

Understand that your child will make choices that you think are not wise- remember this is their money and they are learning- they have to make their own mistakes.

 

You can start giving a child allowance around age three. How wonderful to begin to understand the value of a dollar, and making choices at a young age, when the risks are just a few dollars- instead of learning the hard way as an adult where the costs are much higher!