Fair   40.0F  |  Forecast »

How to Give Your Kid an Allowance

Doing the mental math already giving you a headache? Never fear. Try these five doable tips to figure how much to dole out to your children.

Giving kids an allowance is a time honored tradition as old as, well, having them make their beds or set the dinner table. But for many of today's families, the ritual can create a lot of stress and apprehension. A recent field study by Kidworth.com found very few parents are actually giving their children a steady allowance. It was as if "allowance" had become the new dirty word in parenting. That's right. The "a" word.

The most common fears they shared were that it would lead to power struggles between the kids and parents – or just amp up the materialism that kids today can already possess. One mom said her kids don't need allowance: She buys them everything and, that way, she can control what they get. But that doesn't teach her children financial literacy. How are kids going to learn to be responsible at 18 with their own credit card if they're not trusted and taught how to manage a few dollars a week at age 10?

Most financial and parenting experts agree: An allowance is a healthy way to give your children financial skills that they can carry on through their adult lives. It's only a dirty word if you make it one!

Here are five tips on how to give your children an allowance.

1. No wages for chores

Don't tie an allowance to doing chores! That's right: Your parenting fears are well founded. This instantly turns allowance into a power struggle – something parents have enough of already. An allowance should be an independent stream of income, used as its own learning experience, not a facilitator for others.

2. Age and amount

Start at the right age, with the right amount of money. Most experts suggest one dollar for every year of a child's age. So a 5-year-old would get $5 a week. Five- and 6-year-olds can start to grasp the concept of saving and spending money. Seven- to 12-year-olds are really in the sweet spot for starting healthy financial habits – they want to buy things and are becoming increasingly good at math.

3. Eyes on a prize

Have some short-term goals – toys, candy, games, etc. But suggest some long-term spending goals that you know will come up – electronic gear, a bike, expensive clothing.

4. Bigger picture spending

Use an allowance as a real teaching opportunity. Let your child pick a charity and donate to it every few months. Start a college or private school savings account that they can contribute to. Even if it's only a small portion of the real money you'll need, let them feel what it's like to save for these important life goals. Money guru Warren Buffett says he bought his first stock at age 11, so you can never think too big.

5. The system

Develop a system and stick with it. Some people use a three-jar method for saving, spending and donations. Others have bank accounts. The goal center at Kidworth.com offers tools to help families manage their financial habits online.

The most important thing to do is be active about your children and their money. When approached correctly, "allowance" doesn't have to be a dirty word, it can be a positive partnership between parents and their kids that will last a lifetime.

Add your comment:
Advertisement

More »Latest Articles & Blog Posts

Upping the Prom Stakes: Teen Promposals Sweep High Schools

Upping the Prom Stakes: Teen Promposals Sweep High Schools

Prom? Kids are amping up the pitch with crazy creative presentations that rival wedding proposals – and, of course, posting the pix on social media.

Depression Risk is High for Young, First-Time Fathers

Depression Risk is High for Young, First-Time Fathers

It's common to hear talk about postpartum depression for moms. But, according to a new study, dads are feeling down, too, and suffering from paternal postpartum – or postnatal – depression.

Easter Treats Ideas – Recipes for the Kids

Easter Treats Ideas – Recipes for the Kids

Cupcakes, brownies, cake pops! These creative concoctions aren't just tasty – they're cute, too! Add some fun to your Easter celebrations with these sweets.

Make It Review: Rolli Stamps and Project Idea

Make It Review: Rolli Stamps and Project Idea

This cool new inked stamper product by Funnybone Muse is sure to be a family craft staple. Here's what it's about, and how to use it to jazz up a note card.

Craft Roundup: Muppets Most Wanted Inspired DIY Fun

Craft Roundup: Muppets Most Wanted Inspired DIY Fun

These cool DIY projects are a blast for kids and families to make, all celebrating Disney's latest movie spin on the classic Muppet gang.

Tax Tips for Parents: Deductions and Credits to Know About

Tax Tips for Parents: Deductions and Credits to Know About

April 15 is the IRS tax filing deadline, aka Tax Day. Whether you've got a baby or a college kid, here's how to get the most out of your income tax returns.

9 Month Bump Maternity Apparel Boutique in Trenton

9 Month Bump Maternity Apparel Boutique in Trenton

This downriver area consignment store is stocked with lots of trendy gently used options for new and expecting moms, plus handmade baby gifts and more.

Advertisement
Advertisement
Advertisement