Are allowances the right thing to do with kids? And if so, how much?
There is alot of opinion on the matter. Here is some food for thought on both sides of the coin…
On the one hand, kids need to learn about money somehow.
How are they supposed to learn about money if they don’t have any? So for many, allowances are the chosen way to start their children’s money learning journey.
Usually, allowance ties to a list of household chores. I say “usually” because sometimes it doesn’t. Even some of my friends give their kids allowance without requiring any work for it. I always recommend that if you are giving an allowance to your children, there should be measurable outputs attached.
There is much debate on the amount of allowance to give a child.
I have seen many theories.
One is to give your child $1/week for every year of their age. For example… a 10 year old would get $10/week.
I also read 2 recent (and separate) studies that determined the average allowance for a child in the USA — one said $30/week, the other said $9/week.
There is no right answer on this one. You have to do what is right for your family.
With this stream of thought, you can teach money handling when the child has money of their own to manage. I found a great resource for parents to stay organized with allowances at www.4pocketallowance.com.
On the other hand, there is a growing trend to teach kids about money by “not” giving an allowance. With this stream of thought, a child learns about money management by first understanding how to earn.
This side of debaters believes that giving money to kids on a weekly basis (even if it is for specific chores) sets them up for a salaried job. Their approach is to encourage entrepreneurship by a “pay for service” type system.
For example… maybe there is a list of chores on the fridge with a prescribed value for each one. When the child gets hungry for money, they will do a chore, prove that it is done satisfactorily and collect the payment.
With this method, a child doesn’t gain until they do the work, and they only gain for completed jobs. If they don’t want to work one week, they get zero.
Many who lean toward this model believe that it promotes a “work to earn” mentality with their children. The harder you work, the more you earn… vs collecting a set amount each week.
Both models work. Choose what is right for your family, and maybe even for each individual child. After all, everyone is motivated differently.
Regardless of how you do it, the common goal is to get kids thinking about earning and managing their money. These are skills that will impact their financial success as adults. Share our stories and keep watching for more…