As parents we have many opportunities to teach our kids how to be responsible.
Teaching them how to handle money is one of those opportunities. And an allowance can be a great tool. Here are some ideas on how to use an allowance for your kids.
Allowance Options
1. Give an allowance based on chores completed.
This can be a wonderful way to get kids to do more chores around the house. It can also help kids learn to work towards a goal.
2. Provide an allowance without requiring anything done to earn it.
I know some families that provide their kids a weekly or monthly allowance to help them learn how to save and spend wisely, but don’t tie it into chores completed. This allows the kids to learn about money whether they complete their chores or not. This may sound like it allows kids to just skip their chores and still get paid.
However, if you want to outline that chores are their responsibility as a member of the family; they do not get paid for them. Other consequences can be implemented for not contributing around the house (e.g. not playing with friends, no screen time, etc.).
This helps to separate chores and money into independent concepts.
How Much to Give
It will depend on what you expect them to spend it on. For example, a first grader might use it for small toy purchases while a seventh grader might be expected to pay for an outing with a friend.
One option is to give $0.50 cents a week for each year of age. For example, an eight-year-old would get $4.00 per month. Other ideas could be a certain amount tied to chores done (e.g. a set amount for expected chores like cleaning their room, helping at dinner, taking out the garbage, and cleaning the bathroom. And then offer an additional amount if “extra,” more time-intensive chores are done, like washing the car, cleaning the garage, etc.).
What We Do
My husband and I started giving an allowance of three dollars per week to our son when he was five years old. We have not raised this weekly amount even though he is now eight years old. My original plan was to raise it $0.50 a year, but he buys more toys than he needs already.
It’s all about what works for you!
Also, allowance is not tied to any chores in our house. We don’t treat the allowance as a reward. Instead, it is given weekly. We also refrain from using it as a threat. Our son does not lose his allowance. We really want him to be responsible for his own money and its use.
You might be wondering how chores fit into this scenario. Our son does complete his regular chores, though sometimes a reminder is needed. We feel that the reminders would still be needed even if we paid by chore. We treat the chores as a must-do; meaning if they don’t get completed, there are other consequences.
Keeping chores and allowances separate works for us. However, each family needs to find their own system that works best.
Allowance Benefits
One of the biggest benefits we have gained since starting a weekly allowance has been less begging. If you are at a store and they want a toy, they can buy it. If your child doesn’t have enough money, then they will need to save up.
Also, we have noticed that our son has started weighing whether the item is worth the price to him. I love to see this process (but it would be nice if he didn’t announce that it was not worth the cost in front of the store owner!). Since he must spend his own money on his purchases, there is more planning and critical thinking done.
It also helps develop impulse control. For example, sometimes we will have had a toy in the cart the entire shopping trip and at the last minute, he decides to put it back on the shelf.
Disadvantages
I believe the benefits I have seen show that our allowance system is working for us, but there are some disadvantages as well.
One possible disadvantage can be the extra toys kids choose to buy with their allowance, since they can use the money as they choose. And with all the trinkets that kids come home with from birthday parties and school, we do not need any more!
Also, you may see them buy toys that you know they won’t actually use. Although it might be difficult, allow them to buy these toys. They need to make the poor choices so they can learn from them. My hope for my son is that what he learns now will help him make better choices as an adult.
Allowance Tips
- If they’re saving for a large item, don’t give them the extra money to buy what they are saving for (most of the time). They need to learn to budget.
- There will be some impulse purchasing. This is part of the process.
- There will be regret when they spend money and then cannot afford something else.
We have noticed a huge change in our son’s spending habits in the years since we have been giving allowance. And we are able to enjoy family shopping outings without any begging for items. We can walk down a toy aisle or into a gift shop with no fear — other than he may find another dinosaur toy to add to his collection!
For more on financial responsibility, see Create a Budget: Simple Tips & Tricks to Get Started.
