How to Set an Allowance for Kids
It's important to teach your kids the value of a dollar. Here's a guide to setting up an allowance for kids.
Money doesn't grow on trees -- as the old saying goes -- so it is important that you start teaching your child about dollars and cents at an early age. By setting up an allowance, you can teach your child about spending, saving and the difference between needs and wants.
"When kids get an allowance, they learn how to make decisions, what to spend their money on and how to take better care their purchases," says Maggie Stevens, a parenting expert and author of "The Parent Fix." Here's a guide to setting up an allowance for kids.
When Should You Start Giving Your Child an Allowance?
The age at which to start an allowance is up to each family. Most families start to give some form of allowance when their kids are between the ages of 5 and 10, with the majority starting at age 8, says Dr. Lori Woodring, an author and family psychologist. The best age to start this privilege may also depend upon your individual child. "As soon as my kids started asking about money, I began to give them a small allowance," says Stevens.
How Much Money Should You Give Your Child?
Once again, the amount to set aside for your kids' allowance is a personal decision, but most parents err on the smaller side. "The typical 'rule' is to give 50 cents to a dollar for every year of your child's age, once a week," explains Dr. Woodring. Under this guideline, your 8-year-old would earn $4 to $8 dollars a week, or $16 to $32 every month.
Should an Allowance for Kids Be Tied to Chores?
Whether or not you will require work around the house in exchange for a weekly allowance is another decision you and your partner have to make. Financial experts seem to fall into two camps when it comes to tying chores to a weekly allowance, says Dr. Woodring. Some argue that kids should pitch in and help around the house regardless of allowance, because they are members of the family and are sharing its resources.
On the other hand, other experts argue that tying an allowance to chores can help to teach kids the natural consequences of money. For instance, if you withhold your child's weekly allowance because she fails to make her bed or set the table, she will learn that rewards need to be earned.
Should You Have a Say on How Your Child Spends His Allowance?
Whether they decide to save up for a special toy or blow their entire allowance on a trip to the movies, kids will enjoy having the freedom to spend their own money in the manner of which they choose.
However, it is important that you do not let your child use this as an opportunity to break house rules. For instance, if you don't allow your child to eat junk food or play violent video games, you should place the corresponding restrictions on his allowance spending.
If you have a big spender on your hands, you may want to help her learn how to save. "One popular idea is to split the [allowance] money into three categories: spending, saving and giving to charity," explains Dr. Woodring. By giving a portion of their allowance to charity, you can teach your kids about helping others in need.
When you set up an allowance, make sure that you are available to answer any money questions your child might have. "Children need support when they're learning about the value of money -- how to spend, save, donate and the rewards and repercussions associated with these decisions," says Dr. Woodring.
Jennifer Kelly Geddes is a New York-based writer and editor who specializes in parenting, health and child development. She's a frequent contributor to Care.com and the mom of two teen girls.