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Should You Give Your Kid an Allowance this Summer?

by Mary Thoele

essentials

July 9, 2014

Should You Give Your Kid an Allowance this Summer?

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.


 

Will you be giving your kid(s) an allowance? How did you decide if this is right or not for your family?

Related topics: Money, Kids, kids, Family, Allowance

Share your thoughts

We recently decided to allow our eldest a small allowance twice a month (not tied to chores). With our help, she decided on an amount to give to the church, donate to a charity she chose, add to her savings account at a bank, and then the remainder she can spend. This has been a major lesson in money management for her, and it's working!! She is clearly seeing the difference between "need" and "want," and the fact that little things can really add up. She is also blossoming her awareness of the needs around her, as she spends time researching charitable projects she thinks are important to sustain.

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Wow! Sounds like she is learning a lot! Sometimes giving our kids these little freedoms can really teach them a lot. Thank you for sharing!

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We don't believe in allowance for our kids. We will teach them through a commission-based program. Even at 4 years old my daughter has started learning that doing extra work earns her money to save for what she wants. Easy jobs for her to do of course that are not part of being a part of the family.

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Sounds like you have a great plan for your kids! These lessons are so important for them to learn early on! Thanks for sharing!

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She recently learned a hard lesson of putting a couple of water bottles in her mouth at the checkout at kohls and she then owed mommy & daddy the money for them that we had to pay out for them. We then turned around and gave the money as an offering at VBS for children in India to have clean water. We thought it was a very appropriate lesson for her.

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link for book is not working :( you can delete this comment once you fix it!

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Emma, thanks for letting us know. It has been fixed!

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We don't give an "allowance" as much as we offer our eldest the opportunity to earn money. We never pay him for chores and encourage him to tithe and give offerings at our local church on what he earns. We want him to focus on generosity not just earning a living. It's hard to balance. I look forward to reading the free booklet!

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Love that you focus on generosity. You are such a wise mama!

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