Giving your child an allowance can be a big step in their independence and freedom. In addition, an allowance can teach children the value of money, the importance of hard work, how to save, and even more valuable life skills.
Allowances can vary depending on your family, financial situation, child’s age and responsibilities, and more. This article discusses some essential tips for any parent considering giving their child or children an allowance for the first time.
If you want to start teaching your kids about money but aren’t sure where to start or what amount to give them, keep reading to learn some potential tips for gifting your child with an allowance.
Allowances Are a Privilege, Not a Right
Allowances are a privilege for your child. Regardless of what other parents tell you (or what your child tells you other kids get), make sure your kids understand that an allowance is a privilege, not a right.
If your child cannot work for their own money yet, giving them spending money out of your own pocket can be a great idea. But it is a choice you should make for yourself based on your family budget and the values you want to teach your child.
Your child is in no way entitled to an allowance, and giving your kids money is not part of your inherent responsibilities as a parent. If you notice them acting as if you owe them, nip that in the bud immediately. Explain to them that while you choose to give them money, you can revoke that choice any time you like. Remember, you’re the boss!
Make Sure Allowances Are Tied to Chores
Many parents choose to give their child some personal responsibility alongside an allowance. Age-appropriate chores, such as cleaning windows, taking out the trash, doing dishes, keeping their room tidy, or sweeping floors, are appropriate things to expect of even relatively young children.
If your child already has some chore(s) assigned to them, make sure that those chores are completed before they receive their weekly allowance.
In the real world, you must complete your job responsibilities before you are paid, so it is not unreasonable to expect this of your child before forking over money. Tell them you will not deliver their allowance until their chores are completed.
Don’t Withhold the Allowance as Punishment
Some people think withholding their child’s allowance is a fitting punishment for bad behavior. But many experts agree that it’s not. Punishment is not an effective way to teach them responsible spending and saving. Of course, if your child misbehaves or does something inappropriate, you should discipline them, but not by taking their allowance away or withholding money.
But why? Taking an allowance away seems like a logical and convenient way to teach your kids a lesson, right? Wrong. When you do this, you are attaching a price tag to bad behavior, which your child could decide they are willing to pay to continue misbehaving. You never want to reinforce the idea that your child could buy their way out of being disciplined.
Additionally, the whole setup could backfire on you. Let’s face it: Some kids would rather be broke than have to do chores. In this case, they may decide to opt out of a task and forego the allowance. Or they may try to bargain with you to get out of a specific job they dont like by agreeing to a lower amount. While these kids may someday be expert negotiators, where an allowance is concerned, this behavior could leave you right back at square one. Remember, you’re in control of the funds dispersed in this little setup. Dont let them gain the upper hand.
Amount: Make Your Age
If you struggle with how much money to give your child for their weekly allowance, one option is to pay them their age. For example, if you had a seven-year-old child, you would give them $7 a week. Paying children their age not only gives them a solid understanding of how much money they will make each week but also reinforces the idea of a “raise” every year.
Consider Making Your Child Pay for an Expense
When considering the amount of money you want to give your child, also think about the things you could potentially require them to pay for on their own. For example, if you want them to start buying their own clothes, you might want to give them a “bonus” for back-to-school shopping each fall. You can even put your child in charge of paying a small household expense, such as extra snacks or a small portion of the internet bill. This can help them feel like they are a contributing family member. And it will also help them see just how expensive things are. Teaching your kids about money is one of the best gifts you can give them.
Don’t Hand Out Advances
Don’t give advances to your children if they want to buy something. It might be tempting to give your child a little extra money to make them happy and allow them to buy something they want. However, giving out advances does not teach them the value of spending money wisely and saving it when necessary.
Rather than give out an advance when your child wants something, remind them that if they save their allowance for another week or two, they can buy the item then. Of course, it will be difficult for them (and you) at first, and they may be frustrated, But this process will teach your child that they need to save for things they want, which will be much more rewarding in the end.
Stay firm when it comes to giving your child more money. If you asked your job for more money every other week, they certainly wouldn’t give it to you, so don’t do it for your kids’ allowance! Instead, once your child’s weekly allowance is spent, you should say no when they ask for more. And stand firm! This rule will teach your child to be more frugal with their allowance in the future and will (hopefully) prompt them to spend their money more wisely.
Teach Them About Saving
Many of these tips are meant to teach your child about spending, but ensure you also reinforce to them how valuable saving their money can be for extended periods. Explain to them how much the things they want to buy actually cost in terms of their allowance (i.e., “If you want this, you’ll need to save x weeks of allowance money”). For older kids, talk about expensive things they want in the long run. If the item they want is very costly, consider chipping in once they have saved for a certain number of weeks.
Don’t Replace Lost Money
Kids are kids. And some kids tend to lose things almost as soon as they get them. When kids lose money—especially if it is one of the first times it’s ever happened—they can become pretty distressed.
As a parent, it may be tempting to replace the lost cash to keep your child from feeling upset. However, this really keeps them from learning a valuable lesson. While they might be distraught that they have lost money, they will likely never repeat the habit and will learn to keep their money in a safe place.
So, do not replace your child’s lost money, no matter how tempting it is. Oh, and don’t let Grandma do it either!
Cash is King
For most kids, the ideal allowance is cash. We live in a digital world where many buying options are online or through cards. However, handling physical cash is an excellent way for them to learn the tangible value of their money. When they see the exchange of cash and goods, it helps them understand the value of money. Plus, it teaches some useful math skills! Seeing physical money will also help your children truly see where their money is going, and learn how they feel when spending more or less of it.
Eventually, your kids will be able to make their own money. In fact, many children have started side hustles and been pretty successful! From paid online surveys for teens to dog-walking, to selling crafts online, there are all kinds of ways for kids to make extra cash.