Formula for Figuring Best Allowance

You want to give your child allowance, but aren’t sure how much to give? Well, consider the following:

1. What are they going to have to pay for with the allowance? If you are giving them allowance, and you expect them to pay for their clothes, their fun, and their school lunches, then it better be pretty generous. If you are giving them money for their wants, not their needs, and for some fun, then a smaller amount will work well. For example, you could think of it this way: $8 for a movie on a weekend with friends, $5 for concessions at that movie, and $5 or so for miscellaneous spending throughout the week. $20 a week will cover their fun, and give them a little extra to save up for those expensive gadgets kids always want. But that same $20 won’t go very far if $15 of it is being spent on lunch at school.

2. How old is your child? Younger children have fewer expenses, and the things they need or want money for cost less than it does when they get older. A movie for a kid is $5, instead of $8. Younger children go out less, and need far less money. So, the amount you give your child should correlate with their age. Some people choose to give kids $1 a week per year old they are, up until they are teens, and then the amount tends to jump a bit. $8 a week for an eight year old will go pretty far, for a 16 year old it won’t seem like much.

3. How much can you afford? If you are barely able to pay your bills, then giving kids an allowance, especially a generous one, may not be too wise. However, sometimes giving kids an allowance can actually save you money because you stop buying things here and there for your kids (which actually add up really fast), and let them buy some of those entertainment things themselves. So, evaluate your current spending. Evaluate your budget and financial situation, and determine how much you could afford to give them. If you currently seem to be spending $100 a week on kid’s activities, and you have 5 kids, then you could realistically give each kid $20 a week without impacting your financial situation negatively.

There are all kinds of allowance calculators on the web, and a lot of advice, but what it boils down to, is how much money should you be giving your children, and what should it be used for? An allowance is a great way to teach children financial stability, and money management skills. However, to excessive of an allowance may give them the mentality that money comes easy, and blowing it is no big deal. Find the balance, and base your decision of how much on your child, their needs, and your income situation.