Your Child’s Allowance – How Much

At we understand that dealing with personal finances is something you need to consider on a daily basis. You work hard for your money, you’ve a family to provide for and your children are growing. Now, you have to ask yourself, “Do I give my child an allowance?” and, if so, “How Much?” In order to help you decide on giving your child an allowance, we offer you these helpful tips.

Deciding on an Allowance

Financial experts agree that giving a child an allowance is one of the best ways for children to grow into financially responsible adults. That being said, the deciding factor us up to you and you alone. Have a frank discussion with your spouse over the pros and cons you have with regard to an allowance for kids. If you are a single parent, that discussion can be held with your friends, family members and other parents.

Something for Nothing?

You do work hard for your money. Not once have you ever gone into work to find the boss by your desk waiting for you just to tell you that it’s perfectly ok to sit there and do absolutely nothing all day, and still be paid for a full day of work. Oh, wouldn’t that be great? But it’s not based in reality. The same can be said for your child’s allowance. An allowance for kids is not one just to help you part with your money, it’s also a teaching tool.

Your child doesn’t get to sit around all day playing video games or watching television and earn an allowance. The children’s allowance is used to teach them financial responsibility, the value of a dollar, and how to earn the money. Before even a penny in allowance is given, the child (or children) should be involved with you in a frank discussion of how the allowance is to be earned. Chores and responsibilities are expected to be honored and completed. There is no lesson to be learned on the value of a dollar if that dollar is not earned and valued.

Kids should be made aware too, that if they do not live up to their expectations and complete all their chores, that the allowance is not earned. The idea behind an allowance is not to throw your hard earned money at the child. But to teach them responsibilities, just as you won’t be paid when you don’t show up for work, your child should not receive an allowance for blowing off their chores and sitting in front of the game system while tuning you out.

Determining the Amount

There are a number of factors that go into the decision on the amount of children’s allowance. First there is your income vs. your monthly debt, the amount of ‘disposable’ money you have at the end of every month. Second, you have to be realistic and follow through. Making promises to of an allowance for kids and then not following through because you ran out of funds will not bode well. So be realistic in the amount and the frequency. Age of the child and the amount of children is something else to take into strong consideration as well.

Your teenage son, who runs errands, stacks firewood and helps mind the younger kids should have a larger allowance that the little girl who helps mommy with the laundry, for example. One thing you can do is talk to other parents and find out what amounts they give their children. The amount you decide is not etched in stone either, children must be made aware that their allowance money is based on merit and increases to their allowances will be made accordingly.

What to Spend it On

In order for you to teach a strong financial lesson to the children, you want to have some control over the spending of the allowance money. This can be a tricky area, however, so plan this out before hand and include the spending topic in your initial discussion with the kids. A predetermined percentage should go immediately into savings to assist later on with college, vehicle or whatever their post high school – post age 18 – life needs may be. The remainder of the money should be a discretionary fund. If they are looking to purchase their own video game, for instance, the discretionary fund money can be used for that, providing they have earned enough.

It’s important to remember that children have a tendency to want $100 worth of toys and only have $5 in their pocket to spend. So be sure of two things when helping them make their purchasing decisions, the money they have will pay for what they want in full, and you’re not ‘lending against a future children’s allowance’ to help pay for something they just have to have now.

Later in Life

Having earned an allowance and being able to separate their funds into their discretionary spending and savings, your child will have learned the responsibility of handing their own finances. As they start their first job out of the home, they will have the ability to understand the importance of savings as well as budgeting their money. When they decided years ago that they wanted that new bicycle, and had to save months’ worth of discretionary spending money from their allowance to get it, they learned how to budget an spend smart. These lessons will follow them all the days of their lives and you have the comfort of knowing that you instilled your child with financial savvy and independence that will see them through their golden years.

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