All families think about money a bit differently, but whether your family leans more toward spending or saving, you’ll likely have to decide if you should give your child an allowance at some point. Some families feel that giving an allowance is a good way to teach financial responsibility, while others think that kids don’t necessarily need money of their own.
Deciding whether to give an allowance or not may feel like a weighty choice. It’s important to remember that your child will be fine no matter what you choose, as long as you’re committed to having an open discussion with them about it. Read on to learn more about what you should consider if you choose to give an allowance or choose not to.
If you decide to give an allowance:
Choose a formula for deciding how much and stick to it
Many experts recommend giving either $.50 or $1 per year of the child’s age each week. So that means your 8-year-old would get either $4 or $8 per week. Choose a formula that works for your family, and then stick to it as your child gets older or younger siblings age into having an allowance.
Talk about what parents will still buy for their kids and what they’ll need to buy for themselves
One common allowance pitfall is parents and kids not having a clear agreement of what it’s for. Usually, parents buy all of their kid’s “needs,” and encourage them to save their allowance for a special “want,” like a toy or video game they’ve had their eye on. If there are other things you want to teach through an allowance, like the importance of donating to charity, you’ll want to discuss your expectations upfront and consider adjusting the formula you use to determine their allowance accordingly.
Let chores and allowance be independent of one another
When you tie an allowance to kids doing their chores, you take away their intrinsic motivation to contribute to the family home. Kids should be expected to help out and do chores, but tying those chores to their allowance can lead to power struggles and a misunderstanding of what it means to contribute to the family just because they should.
If you choose to opt-out of giving your child an allowance:
Decide how you’ll manage their wants
Without money of their own (or any way to earn it) you’ll have to decide as a family how you’ll manage their various wants throughout the year. Will they make a list for holidays and birthdays? Will you purchase toys or other wants for them on a monthly or bi-monthly basis?
Be prepared to share your “why”
While not all families offer their kids an allowance, it’s common enough that your kiddo might want to know why they don’t get one. Think through your reasons and be prepared to share them with your child so that you’re on the same page.
Think of other ways to help kids learn about finances
Many parents who give their kids an allowance do so to help them learn about spending, saving, and how to manage basic finances. Without an allowance, you may want to offer these lessons in other ways. You can read books about spending and saving, or offer your kid the chance to “save up” with something other than money (like stickers or marbles) for something they really want.
While having an allowance can be a great way for kids to learn about finances and buy the things they want, it’s not the only way. Your family’s values, your financial situation, and the goals you have for your kids will likely all play a part in your decision to offer an allowance or not. No matter what you choose, you won’t go wrong if you talk openly with your kiddo and work to meet their needs in whatever way you see fit.