When it comes to allowances, every household seems to manage it a little bit differently, and that’s A-OK with us!
Every family will make their own decisions when it comes to amounts, whether it must be earned, frequency, and what their kids are allowed to do with the money.
This guide is meant to give you a few tips on how to form a structure around your allowance system, letting it to be a means to the end goal, which is of course KIDS LEARNING TO MANAGE MONEY! Sorry for the all caps, but we think it’s that important!
At What Age Should I Start Giving An Allowance?
It’s never too early to start building money skills, so we think that the best time to start is as soon as your children are old enough to understand the basics of money. Most experts agree that this is around the ages of five and six. At this point, most kids are counting, learning basic math, and can understand simple concepts, such as knowing that ten is greater than nine.
How Much Allowance Should I Be Giving?
Every household is different, but one thing is for sure—you NEED to pick an amount that you can keep consistent as time goes by! This is going to help with the money management skills your kids will be learning.
Think of an amount that you can manage, and factor in the age of your child. For example, your five-year-old might be happy to get $2.00 a week that they can use to buy a Slurpee, whereas your twelve-year-old might need more to be able to go to a movie or save for a brand name pair of jeans they’ve been eyeing up. Whether the amount is large or small, the important thing is that they have a little money to manage, save and watch grow, spend, or share on a regular basis.
What Should My Kids Get to Do With Their Allowance?
Since we are on the topic of money management, we are of course going to recommend that the allowance is given with a small set of rules. Some of the money can be spent freely, some MUST be saved, and this is optional, but perhaps some can be earmarked to be shared.
As the parent, you can drive the conversation and decide on how they must divide up their allowance. They can use jars, envelopes, or zip top baggies to divide up their cash and coins.
What’s the point of splitting up allowance? Three things:
- Having money to spend! It’s fun, and it’s part of life. Kids spending their own money makes them part of the decision process and gives them a little freedom out there in the world of consumerism.
- A huge part of money management is learning to save! Learning how to do so at a young age can build healthy money habits for life. There’s a pride in watching it grow, and like anything else, it’s habit forming.
- A little money to share warms hearts, helps others, and teaches kindness. Your kid’s ‘share money’ can go to charity, buy a gift for a loved one, or even take Mom or Dad out for a coffee. The point is that they use the money for someone or something other than themselves.
Should Children Have to Earn Their Allowance?
There is much debate on this topic in the financial community, but we say that this is up to each family to decide if they are going to attach an earning component to allowance. Whatever you choose to do, make sure you keep the rules clear cut and simple. “In order to receive your allowance, you must take out the garbage on trash day and make sure your room is completely tidy by 6:00 pm every Friday.”
The ‘allowance chores’ may be separate to their other chores, but try not to tie too many things to the allowance. That can lead to wishy-washy decisions about when allowance is doled out, leading to confusion.
If you decide to give allowance freely, that’s ok too! Just focus on consistency and routine in whatever you choose to allow for the routine to cement, further leading to healthy and positive habits.
At What Age Should I Stop Giving Allowance?
For many families, this occurs once their teens get the all-important first part-time job! Whether they are serving up popcorn at the movies or working at the mall, this is a great time to open the discussion about ending their allowance.
Teens will typically have other expenses that younger children just don’t have that will need to be talked over and have expectations clearly set. For example, you might agree to cover their cell phone bill and a transit pass, but with their job, they must cover entertainment and other wants, as well as build their savings. Again, the key is clarity and solid expectations. If their job goes on pause for a busy exam period or competitive sports season, you should revisit the conversation to make it work for your family.
And That’s a Wrap!
We hope this helps your allowance creation journey with your family. Good luck, and rest assured that 1. You are awesome, and 2. Every lesson you bring to the table for your kids is setting them up for strong financial literacy skills in the future. What a gift!
Do you want MORE money lessons for your kids? Take a look at The Bunnies Talk Money, a book for the whole family!