Most parents get to the stage where they feel compelled to give the kids an allowance. A small stipend to help and teach them the importance of managing money and to give them the ability to either purchase something for themselves or to save for something they want over time.
The big question is not whether to give an allowance but how much you should give and under what conditions.
The basic rule of thumb in our household is that the children have to complete the chores they are given in order to get their allowance in the first place, and the amount is set according to the ages of the children and the amount and level of chores they are willing to complete.
And they NEVER get paid for simply cleaning up their own mess. They know and understand that the chores they get paid for must be for the entire family like taking out the trash or doing the dishes (or loading and unloading the dishwasher in today’s age!) rather than cleaning their rooms which is their responsibility no matter what!
Some studies suggest that the amount should correspond with the child’s age, $10 for a Ten year old, $15 for a Fifteen year old and so on. This is not a bad starting point. The study also showed that the amount of the allowance is less important than being consistent in paying it! This is especially true if they are doing chores as in our home, after all would YOU want to work and then be told that you were not getting paid that week?
The most important part is that it gives you the chance to teach the kids the significance of both earning and saving money.
Many a time has arisen when one of my boys will come running up at the Walmart begging to “borrow” the additional few bucks needed to buy some gadget that they have just seen that the allowance they have received will simply not cover.
In situations such as these the rule of thumb is to suggest to the child that they save their allowance for the next couple weeks to be able to purchase the item. The is usually met with disdain until they are back at home and realize that they never REALLY wanted the item anyway it was mostly just impulse that made them want it…lesson taught!
In some very rare cases, an item is on clearance and they have shown a real interest or something similar, we will occasionally bend a little and make a “loan” to the child in question on the condition that they understand the ramifications of that contract, namely that they will not be getting any money for the amount of time it takes to pay off the loan and they will still have to do the chores they are assigned, if they acknowledge that then ok deal done and another lesson learned!
Allowances are a very big part of growing up and instill the basic rules of money management in the next generations, nothing can be more important than that!
