Overcast   39.0F  |  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

Craft Roundup for Earth Day Fun

Craft Roundup for Earth Day Fun

Repurpose stuff around the house with these family DIY projects, including a jewelry pom-pom box, cereal box gift bags – even a cool makeover for old balloons.

Living Room Spring Cleaning Checklist

Living Room Spring Cleaning Checklist

It's a formal spot in the house – mainly used for entertaining – that gets less foot traffic on a daily basis. This also means it's easier to clean! Get the scoop here.

Bathroom Spring Cleaning Checklist

Bathroom Spring Cleaning Checklist

Haven't kept up on scrubbing your tub or shower? Now is the time to clean up this much-used space – with these helpful tips.

Basement Spring Cleaning Checklist

Basement Spring Cleaning Checklist

Whether it's leftover holiday decor or old toys, this spot in your home becomes the catchall for your family's stuff. Organize it this season with these tips.

Garage Spring Cleaning Checklist

Garage Spring Cleaning Checklist

You just don't park your car there! This space does serious double duty as family storage space. Get everyone involved in cleaning it up with these tips.

Office Spring Cleaning Checklist

Office Spring Cleaning Checklist

It’s filled with papers, old files and tons of stuff to toss. Get started with these tips for organizing your home office.

Bedroom Spring Cleaning Checklist

Bedroom Spring Cleaning Checklist

Ah, sleep. Busy families definitely need a good night's rest after a long day, so why not spruce up your sleep space? We've got tips for you to use!

Advertisement
Advertisement
Advertisement