Something that parents often struggle with is deciding how much money, if any, to give their children on a weekly basis. There are many benefits to providing your child with an allowance—it teaches them how to manage money at an early age and encourages a good work ethic that will help them develop essential skills for later in life. However, if the allowance amount isn’t appropriate, it can become a useless tool and even disadvantageous for the child.
So if you’ve been pondering how much your child’s contributions around the house are worth, here are some tips to consider! Allowances are often discussed in general terms, but you need concrete numbers to work with. You might also encounter some surprising, counter-intuitive advice in this article.
Teaching Money Management Skills
The goal of giving your child an allowance isn’t to enable them to buy that fancy cell phone at age ten. Instead, the aim is to teach them money management skills and discipline in spending. But how can you provide your child with cash without enabling careless spending? The truth is, if you wait until your kids are young adults to introduce them to money, they won’t be prepared to handle it. It’s far better to familiarize them with money at a young age—much like you would introduce them to a second language. After all, isn’t money a language in its own right? Here’s how to encourage your child to develop healthy, money-saving habits.
First, let’s review some of the benefits of an allowance so you can be sure you’re not spoiling your children by providing them with their own income.
When children learn the costs of items they want, they gain an understanding of cost and reward—a concept they can continue to explore as they grow. This invaluable knowledge actually helps prevent waste later rather than promote it. Additionally, money can be a tricky subject, even for adults. Why not give them at least a small income to manage at an early age? This will certainly be an important learning experience that they can apply more and more as they grow older and earn their own money.
Surprisingly, even a three-year-old can appreciate the value of money. That’s why you can begin giving an allowance to your child at a remarkably early stage of development—it doesn’t have to be a lot; even a dollar or two is better than nothing.
Now, the big question: how much money should you give your child? There’s no single answer, but there is a method to calculate an appropriate allowance. Consider how much you, as a parent, spend on your child weekly—for toys, lunches (if your child is in middle or high school), etc. Then give them that same amount! This way, your child gets to decide how to spend it. Discuss with them what they are responsible for buying. Not only does this provide them with the opportunity to manage their own money, but it also alleviates some of your own burden.
Too often, allowance is tied to household chores, but it shouldn’t be. Your child should feel obligated to help around the house, regardless of any gifts or money you give them. Their allowance should be a separate matter. You can encourage them to take on a job or do extra chores if they want to earn more money, but remember that allowance and household chores should not be linked.
You should also adjust the allowance amount as your child grows older. Over time, you’ll find that your child gradually improves their money management skills, learns to appreciate the value of material items, and starts saving on their own. By the time they leave home, they will be well-prepared to handle the larger incomes that await them.
