Allowance is a fantastic way to teach kids about money, and money management. It gives them the opportunity to make some financial decisions for themselves. It also helps them learn the value of money. Money seems to grow on trees when it is someone else’s, but when it is yours, you are usually a bit more careful about how it is allocated. Allowance for kids is great, but how much? That seems to be the pivotal question when it comes to allowance. Most parents see that it could be beneficial, but aren’t sure how to go about dolling it out. The following are some tips for determining how much allowance your child should have, and why:
First, consider your child’s age. A $10 a week allowance for a four year old may be excessive, but for a teenager, it might not even cover lunch at school. The older your child is, the bigger the allowance they will likely need. Age plays a factor in allowance for most people, and the biggest factor is when to start. What four year old needs their own money? So, when deciding when to start giving allowance, and how much to give, always consider how old your child is, and how their expenses tend to parallel their age.
Use your own best judgment when determining the amount.
The second thing to consider is the income your family has. Of course it would be nice to give your children a healthy allowance, but not at the expense of not being able to pay your bills. If you only have a small amount available for allowances, then all of the other factors won’t matter all that much. So, consider your budget, and what you even can do, before you set an amount.
Next, consider what the allowance is for. Is it just for fun? Spending money? Or is it for things like their clothing, shoes, sports fees, school lunches, etc.? The more things you expect allowance to cover, the more you have to give. A kid can’t outfit themselves very well on $10 a week. However, if you are taking care of everything, and the allowance is more for things like going to movies, and buying extra things they want, then a smaller allowance is much more reasonable. Of course, when you give them their allowance, you will want to specify what it is that they should be spending the money on. That way, they know what they can expect from you, and budget accordingly.
Next, you have to consider your area. You may not care what other parents give their kids by way of allowance, but where you live will influence how much you should be giving your child. Kids living in 90210 are likely getting higher allowances than kids in rural Idaho. The point is, despite the fact that you may not care if your child has all of the same dodads and trinkets their friends have, the amount of allowance kids that associate with your kids get will be a part of your decision.
So, how much should you give? That is up to you. A good rule of thumb for younger kids is $1 per year old they are per week.