If you are a parent, you must have heard about the great allowance debt. Determining how much money to give your children in the form of an allowance isn’t easy. Every parent has their own reasons on what is right.
Giving children an allowance is a great way of introducing children to money, teaching them how to save, and general money principles. You can help your children learn that money has to be earned through hard work.
As parents we want to introduce our children money in a positive way. But, at the same time, it can be difficult to put a dollar amount on things children do. Up next we’re going to give you some ideas on how to figure it out.
Chore Based Allowance
Let children learn at an early age that when they do a chore, they earn money. If they don’t do any chore, it means no money. Let children learn to make the right decisions and know there are rewards for the right choices.
It also teaches them to work more if they need more money. However, this approach has negatives like making children think doing chores are a choice – which they aren’t.
This approach makes children think when they make their beds, take their utensils to the sink, and wash dishes it earns them money. But they also have to know that they’ll have to do all these things for free later on.
The big question then is about what things you should pay them for.
This approach means children get an allowance at the end of the week or month that is not attached to any chores. Children are expected to do chores and help around because they belong to this family.
What makes thi.s approach stand out is that children will receive their allowance no matter what. The benefit of this scenario is that children get firsthand experience with real money.
Children also learn that it is their responsibility to do chores at home like anyone else who stays in the home rather than chores being attached to money. And they have to figure out how to use their money wisely.
However, some critics say the downside of this approach is raising kids that think they are entitled to free money. Also, such children are not likely to learn the benefits of hard work.
If you don’t agree with either of the approaches above, there is a hybrid approach. This one provides the best of both worlds.
Give your child a specific amount of money at the end of the week and let them know that you expect them to do chores like washing dishes, making their beds, and cleaning certain areas like the yard.
Tell them that in case they need more money, then they have to do extra chores that are different from the daily chores you expect them to do.
Some of these extra chores can include washing your car, walking the dog, or raking leaves. This approach erases the grey areas, gives children real money to learn from, and sets clear expectations.
How Much Money to Give
The million-dollar question is how much allowance should you give your child? The site Rooster Money recommends that a child aged 4-14 should be given an allowance of $8.43 weekly and that should increase as they get older.
The amount of money a child gets depends on their parents and their financial situation. This is when your parental intuition has to kick in.
If you have promised your children a specific amount of money weekly or monthly, ensure you do it consistently. You want your children to learn to stand by their word, not be liars where money is concerned.
Set boundaries on what the kids can use their money to purchase and where you chip in. This will help them learn how to budget to get the things they want.
Allowance Should Be Positive
If your child misbehaves, don’t punish them by withholding or taking away their allowance. Don’t use this money as a punishment.
Note that this is your child’s firsthand experience with money, therefore it shouldn’t invoke anxiety or any fear emotions. You don’t want a child that grows up attaching fear and anxiety to money.
The debate about children’s allowance is a big one and it is not about to end soon. Questions regarding how much allowance to give, when to give it, and at what age to start have no one-size-fits-all answers.
Your kids are going to school, and picking up all sorts of financial information you don’t even know about. It’s your responsibility to make money make sense to them by setting allowance rules in your home.