Earning allowance money is an important part of growing up. It teaches your children responsibility, organization, time management, the value of a strong work ethic, and the beginnings of financial responsibility. But how much money should you give? Is there a standard you can go by based on the work they do, or their age? Here are a few tips for how to go about determining the amount of allowance money you should give your kids?
How Much Allowance Money Should You Give Your Child?
First and foremost is your child’s age. It’s fairly obvious that the older the child, the more money they should receive.
What constitutes a reward is very different when you’re eight years old versus fifteen years old.
You could start with a basic rule of thumb dependent on the age of your child. But then you need to figure out how to raise it as they age. It’s going to take a judgment call at some point.
Think about what the allowance money will buy, and what your child’s goals and interests are. If your child is in elementary school, chances are they’re just thinking about toys and fun, so perhaps come up with an amount that allows them one nice reward each week.
When your child is in high school, they’ll be thinking about dating and affording a car. But even if you’re not going to let them buy their own, they’re going to want to borrow yours, and you can teach them responsibility by requiring them to pay for gas and other expenses.
If your child is in college an allowance may need to take into consideration not only fun purchases but the sort of necessities they enjoyed for free at home. Make sure the work you’re requiring is worth the cash, but an allowance set too low will not be a proper incentive.
Make sure the work you’re requiring is worth the cash, but an allowance set too low will not be a proper incentive.
Next, you should consider your family’s economic position. We all want to give everything to our children, but you’re going to have to make some concessions based on your family income.
Be realistic about the plan you set up with your child. In an instance like this, having an open conversation with your kid about the realities of your situation will do much to teach them financial responsibility, even if they’re not thrilled with the final allowance amount. But if you’re honest about the situation, they’ll respect and understand your decision.
Finally, think about the realities of your town. If you live in a rural community, allowances will certainly be less than if you live in a fancy high rise.
Remember that your child’s allowance is something they are going to naturally compare with their classmates.
Set the bar too low, and your child may feel like an outsider, with trouble relating to the other students’ situation.
Give too much, and your kid may develop a sense of entitlement, and miss the financial lesson you’re providing.
If you have close friends within the community, ask them what they give their children. Setting your child’s allowance at fair value within your community will help take away any issues of peer pressure they may face.
Take a look at some of the debit cards you can set up for your children, where you control the money added to the account. It’s a great way to help them understand money management, while you can easily control the flow of allowance. Hunt out some merchant services reviews for the best program, and whatever value you set for their allowance you can easily manage without having to run out for cash.