Can I have that, please???
As a parent, how often have we heard that familiar phrase? If you don’t have kids, I’m sure you remember a time you berated your parents for a prized possession. At times we may give in, and other times we brace for the tantrum that is sure to follow the word, “No.”
Whether your child is 17 or 2, chances are they’ve asked you to buy them things. Giving in to all those wants can set you up for financial disaster, and teach your children the wrong message about money.
What’s a parent to do? Give them an allowance, of course!
Once the word allowance enters your mind there are several questions that follow:
- Should the allowance be given freely OR tied to chores?
- Should I only pay for extra chores?
- How much money should I give my kid?
- Should I let them spend it on what they want OR should I force them to save a portion of it?
- Coins, bills, or a savings account?
- How often should I give him/her allowance?
I’m sure you can come up with at least 1/2 dozen more!
There are various approaches to giving an allowance. Some parents believe every child should do basic chores without pay (making the bed, clearing the table after dinner, etc.) and offer extra chores for pay. Other families give an allowance weekly, or monthly that is not tied to chores. Still others will use a combination of both. Sticker charts, checklists, and to do lists are becoming a more popular option as well.
There is no right approach. It’s just what works for you. You may need a trial period to see if your ideas work with your kids.
The important thing here is to put actual money into your kid’s hands and to teach them how budgeting works. Many adults carry baggage about money, and most often it stems from lessons we learned as children. Most often these are unintentional messages that our parent’s sent about how they felt about money.
Opening up to your kids about working, money, and your bad habits is key. For instance when you go grocery shopping you take a list, if the kids tag along have them be responsible for a portion of the list. Perhaps cereal is on the list. Show your child the prices and give them a number you want to spend, and let them choose. Or maybe you need milk. Point out the difference in price between a half-gallon and a gallon, and why you choose the size you get. For us, it’s because we go through a lot of milk, for other families it may be that a gallon is too much, and they would be wasting their money.
Two of the most frequently asked questions about allowance are:
How much should I give my child? And how frequently?
Many families give a small amount a week, and increase it as their child gets older. By the time your child is a teen, they should be able to handle their back to school spending, and a monthly budget.
Typically it is best to pay a young child weekly, or every other week, and an older child should get used to being paid on a monthly schedule.
Where should my child keep their money?
When they are very young you can encourage them to save their change in a piggy bank or change jar, and to give their coins as donations to church or to charity. Dollars can be kept in a wallet, or in the mom or dad’s wallet for safekeeping.
You can save money automatically for them, and take half of the cash they might receive on birthdays and at holidays into their savings account.
Around age 8 or so most kids are ready to set up a savings account. Choose a bank you can walk into, so your child gets the experience of handing over their money, and figuring out how a bank works.
Many banks offer incentives such as summer reading programs where they will put $10 into your child’s account.
What my family does
In my family of 6, we pay our kids bi-weekly an amount equal to their age. We used to take them shopping on payday, but quickly learned by doing so we were teaching them to spend every dime. The kids use wallets to hold their cash, and take them along when we go out. They have been saving more this way, and all 4 of the kids are now interested in opening up savings accounts.
They use their money as they see fit. I do not ask that they donate a certain amount, or save a certain amount. My oldest daughter decided she likes buying lunch at school, so she invested $10 in her lunch account so she can choose when she wants to buy.
We do not pay our kids based on chores. Chores are an expected part of life, and since mom and dad don’t get paid for chores neither do they. I will pay extra for chores that are outside the norm. A quarter for picking up a bucket of pinecones, $1/bag for the older kids to rack up leaves and put them in a bag, and $5/week for cleaning the cat litter (so far no one has taken me up on that one!).
We also have a family change jar. The family change jar helped us buy a puppy this year after 2 years of saving all our change. We’re currently saving for a DisneyWorld vacation. Everyone is motivated since we all benefit from the savings. We use a 5 gallon water jug that is empty, and taped on a picture of Disney to it. (note: we’ve since used it to go to Disney twice!)
As the kids get older I anticipate giving them their back-to-school budget to spend. Once they reach the age where they need $10 every other day we will set up a joint checking account so they can learn to manage small sums of money.
The kids will be touched by certain causes and feel motivated to donate money or their time. This is something I heartily encourage. There is no better feeling than knowing you helped someone who needed it. My kids often donate change to various causes, and I expect we will find causes that they personally feel drawn to support throughout their childhood.
What about you, how do you deal with allowances? Do you use an allowance as a springboard for talking to kids about money?