Kids and allowance. Should they get one and if so, how much?
The following tips can help you decide if an allowance is right for your kids. Plus, I’ve put together some ideas to crunch the numbers and help you figure out why it’s okay to give your child an allowance.
First things first...
The question is: Should your kids get an allowance? To help you decide, consider the following points:
An allowance can help kids:
- Learn responsibility
- Develop an understanding of how much things cost
- Learn how to save and budget for things they really want
- Make more intentional choices about how they use their money
On the flip side of the coin, some parents believe that kids will begin to expect payment for anything they do around the house. If that’s the case, you may want to consider paying them an allowance without tying it to specific chores.
Crunching the Allowance Numbers:
If you decide that an allowance is a good tool for teaching kids smart money habits, the next question is: How much? That answer depends on what’s right for your family, your budget and your values.
Here are some guidelines to help you set a rate:
Make a proposal
Ask your kids to suggest an appropriate amount. Based on that proposal, determine what amount matches your budget and your values. Plus, your child can learn important negotiating skills in the process.
Don’t pay for “chores”
Some experts recommend keeping allowance and chores separate. The rationale is that kids should help out simply because they’re a part of the family. A happy medium is to pay kids a base allowance that isn’t tied to routine chores (like making their bed or taking the dog for a walk), but also to reward special tasks, like washing the car.
Cover “needs” vs. “wants”
Determine what you expect the allowance to cover. Tally up those items and their associated costs, then share the list with your child, along with the allowance you’ve decided on.
Dare to compare
Some parents like to give their children the equivalent in today’s dollars to the allowance they received at the same age. An allowance calculator can help you get an idea of how much to pay based on factors like your child’s age. You can then compare the “purchasing power” of today’s allowance with what you received as a child.
Mary has found many reasons that have helped her think about why giving your child an allowance is important. Please remember that any opinions expressed are Mary’s own and that brightpeak financial is not affiliated with or responsible for any of the outside content linked herein. Each person’s situation is different so be sure to choose a strategy that best fits your individual circumstances.