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Making Allowances Work

Children and money

Children become aware of money at an early age because they are exposed to it as part of every day tasks, such as grocery shopping or using an ATM. By the time they reach preschool, children become curious about money and realize that certain things they want can be bought. At this age, it is very common for children to have tantrums in the store when they want something because they know that you have the ability to buy if for them. By age 5, children are able to identify bills and coins. Introducing children to how money works at an early age is an important piece of their education and development and will help them become successful as adults.

Teaching your child to understand the value of money

Begin with a piggy bank. Even before you decide to start your child on an allowance or teach her about money, she may enjoy collecting coins or saving them in a piggy bank. This is a great opportunity to help your child with her counting skills, as well. As your child grows older and starts having more money, the piggy bank can be transferred to a real bank account.

Start them on saving early. The recommended age at which to start giving your child an allowance is around the time he starts elementary school, or when he shows interest in having his own money, which is usually around the age of 5 or 6. This is a great time to practice math skills with your child as he slowly starts to accumulate his own savings and spend it. Whenever you start giving your child an allowance, it is a good idea to teach him right away how to save by suggesting he put aside a certain amount to spend and keep the rest in his piggy bank, or eventually his own bank account when he is old enough. Help him realize the value of savings and what kinds of things if will be useful for in the future. At this time, you can also help your child notice how much things cost and how money is spent. When he asks for something, determine how long it will take him to save for it.

Allowance ABC's. The average amount of allowance is about one dollar per year old your child is per week. However, this can and should vary based on your family circumstances. There is no right or wrong way to give allowance – some parents prefer to give it monthly and others weekly. After determining an amount, you and your child should discuss dividing her earnings in two portions: one that will be saved and one that can be spent. The amount of allowance should also be based upon what your child is expected to pay for, and you should discuss this with her. With younger children, parents generally provide the basics of food, clothing, books, and basic toys, and the allowance is more of a teaching tool and a way for your child to learn that she cannot get every toy she sees and wants. However, as your child gets older, you and she may decide that you will give her a little extra allowance so she can buy her own clothes or pay for her lunch at school.

Allowance and chores. In some families, getting an allowance is linked to doing certain chores, like taking out the trash, walking the dog, or folding laundry. Other families feel that chores and allowance should not be linked because children should learn to help out around the house without being rewarded. This is really a personal choice for you as a parent to make. However, regardless of whether your child receives an allowance, you should still assign him some things to do around the house so that he can learn responsibility.

Rules should still apply. Although at least a portion of your child’s allowance is for her to spend as she wants, you can still have some say on what she spends it on and remind her about your family’s rules. For example, if you do not allow video games in the house then your child should respect that rule and not purchase them with her allowance. Or, your teen may want to spend her money on extra clothes. However, if you have certain limits on what she can wear then she should abide by these even when she is buying clothes on her own.

Mistakes are ok. Offer guidance to your child but don’t direct his actions. It is his responsibility to manage his own money. However, understand that children do make mistakes and you can try and help them learn from these mistakes by coming up with solutions. For example, an unexpected occasion may arise, like a new movie, that your child may want to see with his friends, and he may not have quite enough for the ticket so may ask for an advance on his allowance. While you should not make it a habit to give you child his allowance in advance, we do like to indulge our children every once in a while!

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