It’s estimated that about half of all families give their kids an allowance, but how and why kids get an allowance varies. Regardless of how you choose to structure allowance in your family, remember that your children will take cues on how to manage their money from you. If you want to raise a generous child or one who is a good saver, be sure you are setting a positive example with your own actions. If you are wondering what would work best for your family, here are six questions to consider:
Is My Child Ready for an Allowance?
Experts Weigh In
Looking for a way to give your children practice managing money? Providing a regular allowance is one way to teach kids how to save money, keep to a budget and make some basic purchasing decisions
When will my child be ready for an allowance?
It’s best to wait until your child has acquired basic math skills before giving him an allowance. If your child still believes that because a nickel is bigger than a dime, it must be worth more, he’s probably not ready. Your child’s interest and overall maturity are also factors to consider.
Should an allowance be earned?
Some experts suggest that children earn an allowance by completing household tasks. But others feel that kids should view chores as a responsibility, not something they get paid to do. In some families, kids receive a regular allowance but can earn extra by taking on additional responsibilities beyond their basic chores.
How much money is appropriate to give my child?
A basic rule is to tie the amount of the allowance to how your child is expected to use it. Children can gradually become responsible for purchasing both necessary and optional items. Calculate the amount your child will need to pay for some basic expenses such as school supplies (if she’s old enough to be responsible for these), have some to save, and have spending money for extras.
How can I get my child to save?
Surveys have found that younger kids are more likely to save than older kids, so it’s smart to encourage saving early on. If there’s something special your child wants, help her calculate how much she needs to save each week in order to purchase the item. Some banks will allow kids to open their own savings account, which can be an incentive to save. Older kids can even learn how to invest some of their savings.
How can I raise a charitable child?
Help your child select a specific charity to donate a portion of his allowance. Find one that has personal meaning or that offers a visible way of seeing the results of his giving.
How can I keep track of what I’ve given my child?
Create a bookkeeping system. Use an excel spreadsheet or notebook to record when and how much you’ve given your child each week.