Do you give your children an allowance? Are you on the fence about how or whether you should? Many families chose to give an allowance to their children, but when should you start? And how much do parents give, these days?
Allowance Options:
- Allowance for chores: This version of allowance requires that children complete a certain list of chores by week’s end in order to earn the money. No chores? No money! Another version is that parents give the money at the beginning of the week and expect chores to be done. The child must pay the parents back for any chores left undone at week’s end. The benefit of this option is that it encourages children to do their chores. The drawback is that if a child isn’t motivated by money, the method won’t work at all!
- Allowance for nothing: This allowance option is a “something for nothing” trade-off that many families feel is reasonable as a method for teaching money management skills. Some families say that they feel that a child’s “job” is to be a good student and the allowance is compensation for that job. The drawback of this method is that it does not really mimic real life where money will never be a hand-out. Because it is so easy to come by, children are also less likely to learn fiscal responsibility.
- Child-driven earning: This option can be used alone (as my family does) or in conjunction with either of the above two options. With child-driven earning, a child is given the option of doing chores or jobs to earn money. This option gives children the freedom to choose between several jobs and frequency or difficulty of jobs. It rewards highly motivated children and doesn’t burden children without a drive for money. It most closely mimics adult life as children who work harder or conquer larger or more difficult tasks will naturally earn more money and those who are lazy may earn nothing or earn more slowly. It also encourages children to plan, financially, for their goals and work toward the goal. The drawback to this method is that if a child is not motivated by money, they may not have an opportunity to learn fiscal responsibility.
It should be noted that, although chores are not tied to money in Option 2, many parents still require their children to do chores as contributing members of the family, without reward. Similarly, in option 3, many children are still required to do basic chores with more obscure or larger jobs saved for those who want to earn money.
What’s the Going Rate?
Parents who give allowance under option 1 or 2 often scale the allowance to reflect the age of the child. The average allowance for elementary-aged children is $4/week, middle-schoolers earn around $6/week and by high school, parents average $10/week in allowance per child. Of course this will vary significantly by area. If in doubt, ask your neighbors. We were shocked to hear that some of our 8 year old neighbors are given upwards of $50/month in allowance!
Spend or Safe?
Because fiscal responsibility should begin in early childhood, parents should teach their children to safe a portion of their allowance or earnings. Many families also find it important to have their children set aside a portion of their earnings to donate to their church or to charity. Children should be allowed to spend the rest, freely.
How Old is Old Enough?
A good rule of thumb is that money management skills should begin when a child is old enough to count to 5, usually around age 3. Children this age can begin to learn that money is requird to purchase items and the difference between “not enough money” and “enough money” and can begin to associate saving and earning with the acquisition of desired toys.
Bottom line, there is no right answer when it comes to how much and how to structure allowance but children simply must have experience with money in order to learn how to manage money.
For more information about teaching children money management read: Teaching Our Kids Fiscal Responsibility