Getting an allowance was a big deal for many of us growing up. It was the first time our parents put us in charge of money; we could save it up to buy something big or spend it weekly at the local stores or ice cream truck. It made us feel responsible, grown up, and gave us our first chance at money management. But now that you have your own family, how are you navigating allowances with your kids? Right now is a great time to get the children started with an allowance, especially while everyone is home more. Here are some common questions we hear from parents about whether or not their kids should get an allowance:
1. Should I even give my child an allowance? It is widely praised to begin giving your child an allowance between the ages of six and eight. It teaches them money management and the rewards and risks of spending their money. Best of all, at six years old they aren't making too risky of financial moves. It's also a good chance to teach them how to budget and to see what happens if you save instead of spend.
2. How much money should I give my child? The first thing to consider is that this will now be an added expense for you, so think about what you can afford for an allowance. Next, figure out if you want to give them an allowance based on their age or based on completed chores. Some parents give a dollar for each year of their child's age while others do it based on a set of household duties. If your kids are older, you can also set an allowance based on some of the expenses they need to start incurring. Does your teen want to go shopping? Go out to dinner with friends? Buy a new gadget? Set their allowance based on what your kids need to pay for themselves.
3. Should I always tie an allowance to chores? That's up to you! Remember that many chores are household duties that children need to learn to do on their own without getting paid for them. For this reason, daily chores such as making their bed might not be the right choice to associate with an allowance. However, you can set an allowance based on bigger chores, like helping to clean out the garage or mowing the yard, or even weekly "do good" acts like helping out with siblings, doing some extra reading, etcetera.
There's no one right or wrong decision when it comes to giving your children an allowance. Allowance can be a great tool to help kids learn to manage money from a young age so they can grow up to be financially responsible adults. Another great tool to help raise money smart kids is the Telhio Money Mammals Kids Club, a savings account perfect for children 11 and under that helps teach smart saving, sharing, and spending. For more information about Money Mammals, visit www.telhio.org/money_mammals.
