Kids and Allowances: Age appropriate Guidelines

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By Nancy Da Silva

If you’ve ever been shopping with your children, after much begging and pleading from your kids for everything in sight, you’ve more than likely used the phrase ‘money doesn’t grow on trees’. You probably heard your parent’s voice in your head when you said it too. You know now what they were trying to say and are now are faced with having to teach your children the same lesson: You work hard for your money and have to budget to be able to afford what you want and what you need.

Your children don’t understand this concept. At the word ‘budget’ they simply stare at you blankly. All they see is that you go to the store pull out your wallet and walk out with stuff. They have no concept of where the money comes from or that you can’t just buy whatever you please, whenever you please. So how do you teach them this important lesson?

Well, many financial experts will tell you that an allowance is the very best way to teach children all about money management and the earlier you start the better. So once you’ve decided that an allowance is a good idea, the questions then become how much, does age factor in and what will your children have to do to earn this allowance?

The biggest mistake parents make is implementing an allowance too late. They usually start at twelve or thirteen and by that time, kids are like sponges, largely influenced by commercials and their friends. Budgeting their money pales in comparison to owning the latest hot brand of sneakers that everyone at school is wearing.

So the key is starting young, usually once you start noticing that every time they go shopping with they start pulling things off the shelves and looking at you with that look. When you notice these moments occurring with more frequency it’s time to sit and have the ‘money’ talk. Around the age of five or six is a good time to start the ‘allowance’ ball rolling. You can sit them down and inform them that every week, they can have a certain amount of money to pay for the things they want.

A good indicator of how much to give your child is to decide what you think your child is most likely to spend that money on. A five year old will probably want to buy candy or small toys. Let them know that this money is the only money they will be getting from your for things the don’t ‘need’ like food and clothing and occasional gifts. If they want something that costs a little more, well they will simply have to learn how to save up.

Explain to them about how you make money by working or if you’re a stay at home mom, by working together with daddy to keep house and take care of them. You make money to buy the things you need and to pay the bills and if you want something nice for yourself, you have to save money or you won’t be able to afford it.

When they come shopping with you, they can use their money to buy things, but only things they can afford. If they want something that costs more, they are not allowed to ask you to make up the difference. For a small child, a dollar every week will usually allow them for the little things they would buy and help them start to save up for things that cost a little more. Even if the child loses the dollar, which is likely to happen at that age, it’s important not to give them another one until the agreed upon day of the next week. This will teach them responsibility.

Once they reach the age of nine or ten, if they’ve proven they can be responsible with money, it would be reasonable to raise their allowance to five dollars and with each passing year, raising the amount by a dollar would be fair.

Once they reach their teen years, relatives might sometimes give them monetary gifts. In keeping with the intent of a gift, this is their money. However, it should be doled out in the same amount as their allowance. So instead of five dollars a week, they get ten. However, they should understand that this will only last as long as the monetary gift lasts. Once they’ve spent their gift money, their allowance goes back to the initial amount. This will cause them to think twice about going through the money faster, just because they’re getting more. In fact, if they know the bonus money won’t last, they’re more likely to save it towards the purchase of something they really truly want as opposed to an impulse item.

So once you decided how much you want to give them, you have to think about how you will have your child ‘earn’ their allowance.

Depending on their age, how they earn their allowance will be different. The tasks that a six year old can complete will obviously be different than the ways in which a tween or even teenager can earn their allowance. For a younger child, you can make a deal with them to help out around the house, completing little tasks like helping you with laundry or clearing the table after dinner or feeding the family pet.

An older child can compete more difficult tasks like bathing a family pet or taking out the garbage every night or doing the laundry, perhaps even preparing some of the family meals if they’ve demonstrated an aptitude in that area.

You can work in education as a part of their allowance earnings by having good grades be another incentive.

The most important thing is to be consistent with both the amount given every week and the chores they have to complete to earn the money. You’ll find that as they mature, the lessons you’ve instilled will help them make informed choices not only with money but the sense of responsibility will spill over into other areas of their lives as well…leaving them less likely to go bankrupt at thirty and move back in with you.

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