Options for Starting an Allowance with Your Kids
Yes, You Can Have That Toy – If You Buy It With Your Own Money!
While at Target recently, a Tiger Beat magazine caught my daughter's eye. Her current favorite band, One Direction, was featured on the cover. She asked for a minute to look through it. I was prepared for the begging to kick in, followed by the pouting when I refused. I was pleasantly surprised when she didn't even ask. She quietly put it back on the shelf and followed me when I told her it was time to move on with our shopping.
I asked her about it later. She said she wanted the magazine, but she knew I would refuse to pay for it and suggest that she use her allowance. She didn't want to spend her own money on the magazine since, “It will just get torn or wet and end up in the recycling bin.”
It was one of those Proud Mom Moments when you realize that your child really is absorbing what you're trying to teach. Giving our daughter a weekly allowance has been a great move for our family. There are several different ways to go about it. What works for one family won't necessarily be effective for another. While, there isn't a one size fits all solution for giving an allowance, here are some factors to consider:
How old is your child and what is their maturity level?
These factors will help steer your decisions as you determine the allowance system. You don't want to make it so easy that your child takes getting an allowance for granted, but you also want to set realistic expectations based on their age and maturity. Visit your library or bookstore for books to read with your child to help explain money management and the concept of receiving an allowance.
What purpose do you want the allowance to serve?
Is it to teach the value of money, be an incentive for chores or simply give your child some cash in his pocket? There is no right or wrong reason, but having a clear concept of why you are handing it out will help you plan the other factors. You should also explain to your child why they are getting an allowance and what you hope it will help them achieve.
Will the allowance be contingent on anything?
Some children need to complete all of their chores, meet behavior goals, earn set grades on their report card or meet other criteria in order to receive their allowance. In other families, the child receives the allowance no matter what. Another option is to blend the two methods. In this scenario, the child receives a small base allowance, but has a list of “extra” chores he can choose to do for additional funds.
How will the money be administered?
Options include:
- Handing out cash every Friday
- Paying in a lump sum monthly
- Putting the money directly in your child's savings account
- Adding the funds to a prepaid debit card
- Holding on to the money and keeping track of your child's credits and debits for her
Will there be restrictions on how your child spends it?
If your family has specific rules, such as forbidding toy guns or candy, make sure your child knows that the rules still apply even if he has his own money. Some parents require their child to devote certain percentages of the allowance to charity or savings. Others give their child free reign on how the allowance is spent.
What will they be expected to pay for out of their allowance?
Will your child be expected to use her allowance for lunches, clothing or school supplies? A popular option is to give older children and teens a budget and allow them to keep any excess funds. For example, they may receive an allowance of $20 a week, which includes their lunch money. However, they can choose to brown bag it to school and use the money in other ways. On the other hand, you might prefer to purchase all of your child's necessities and give her a small allowance to cover her “wants”.
How much should you give?
Once you determine if your child will have to pay for items out of the allowance or not, you can determine how much to offer. There are many different formulas used for this, such as a dollar a week per the child's grade. This can give a starting point, but only you can determine the right amount for your child based on all of the above considerations. Also, think about pricing in your area. If you want your daughter to pay for her weekly trip to the movies with her friends, make sure you give her enough to cover it. This amount will differ greatly depending on where you live and the price of tickets.
Here's what we do:
Our daughter is eleven. She receives a flat rate of five bucks each week for her allowance. It is not contingent on chores. We feel she should help out around the house because she's part of the family and not because she's paid to do so. Plus, keeping up with how much she earns and if she completes the chores is more work than I want to add to my plate!
However, she's responsible for cleaning her room and bathroom each week. I f she doesn't do it, she has to pay me her allowance for the inconvenience of having to nag her about it and she isn't allowed to participate in fun extras until it’s done.
I see allowance as both a teaching tool and convenience. I made a lot of financial mistakes in young adulthood because I didn't know how to handle money and I want to help her avoid that route. The other main benefit of her allowance is that she has her own money and isn't constantly begging us to buy her stuff.
It took time for her to wrap her head around the concept that if she wanted arcade tokens, a toy or nail polish she needed to use her allowance. She wanted to hold on to her money and still get the things she "had" to have! Now, she just needs an occasional reminder.
Her $5 is automatically transferred from our checking account to her savings account every Friday. I'm happy to front her money if she wants to buy something, provided she has enough in her bank account, and deduct the amount online later. This keeps her from taking cash to school and losing it or spending it all on her friends, which she'll instantly regret.
It also causes her to stop and think. I might help her get the wheels turning by saying something like, “You have thirty dollars in your account right now. That big stuffed snake costs $24 plus tax. I know you want a souvenir from the zoo, but that will almost wipe out your money. It will take you over six weeks of allowance to earn it back. Is the stuffed snake worth six weeks of allowance?”
Sometimes she makes the choice I'm hoping for and saves her money. Other times she makes a purchase that I consider to be throwing her money down the drain. It's her money, though, and these are her decisions to make. We let her spend or save her allowance as she sees fit. She isn't always happy with her choice afterward, but she's learning the value of money first hand.
Some of her favorite purchases have been ones I discouraged. That giant stuffed snake has had a spot on her bed for over a year now. Her name is Laurie. She loves that silly thing and has never expressed regret at spending six weeks of allowance for it. She's learning to splurge on the items that make her happy and skip the ones she can do without, like teen celebrity magazines.
Rachael Moshman is a lifelong Florida resident, but hates the heat. She holds a bachelor's degree in psychology and a master's degree in education with focuses in early childhood, infant/toddler development and special needs. She is a freelance writer and college instructor. Her greatest accomplishment is becoming the last mom to an amazing little girl through foster care adoption. In addition to her husband and daughter, she lives with two cats and a mannequin named Vivian. She is a magazine junky, owns too many shoes and collects tons of recipes that she never attempts to make.
Allowance Tools
There are websites out there (one that comes to mind is Kidscash www.kidsca.sh) that will help your kids to budget their allowance money into what to save, what to spend, and what to donate to charity. If you start them budgeting at a young age, they'll be more educated consumers later on in life!