Although there aren’t always hard and fast allowance rules, the ideal time to start giving an allowance to your child is at the beginning of the school year. An allowance teaches discipline and responsibility, forcing kids to think about choices and consequences. It’s also a great tool for math, money management and saving for the future. When these skills are applied to children’s schoolwork, you may actually see improved grades, an increased desire to learn, and greater confidence.
What is the best age for starting an allowance?
You may have seen or heard a variety of answers to this question, including comments that most money experts agree that preschoolers are too young to have an allowance because they don’t fully understand the concept of money. Once kids are in school and begin learning about dollars and cents and buying and selling, they likely have a much better idea of what it means to spend money from their own stash versus having mom or dad pay. Because you know your child better than anyone else, however, you are best-qualified person to decide the age at which your son or daughter is ready to be paid.
How much should the allowance pay?
There is no “perfect” amount. Base your figure on reality. Your goal is to teach your child responsible earning in exchange for chores and responsible spending to your child. So do your research before throwing out an arbitrary amount. For example, you may want to keep track of what you spend on your son or daughter for non-necessity items such as baseball cards, toys, video games, apps, unlimited texting or fast food. If your daughter enjoys having her nails done once a week for $10, tell her that she needs to start paying for half of that luxury. Make her allowance $6 a week. Why $6? Because you want to encourage her to spend, save and give to those in need. In this example, $5 would go to the nail appointment, 50 cents would go to her savings, and the remaining 50 cents would go to charity.
What is the best day to give an allowance?
This may seem like a silly question, but the best time to give an allowance seems to be on a Sunday night. Why? Because the child can’t rush out and immediately spend the money. During the school year, your child will also have less opportunity to spend the money the next day. This delay is important because you want the child to spend time thinking about what to buy. You’re also helping them avoid impulse purchases. Another smart idea is to give an allowance in small denominations. For instance, give younger children four quarters instead of a dollar bill.
Older kids could receive single dollars instead of a five- or 10-dollar bill. This method helps encourage your child to carry less of their earnings when they go shopping. For example, if all they have were a 10-dollar bill, they’d have to take the entire amount to the store. With smaller bills, the child could decide to take less.
Since the basic goal of an allowance is to teach a child wise money management, be sure to set a good example in your own life. Set aside a portion of your income as savings. Avoid impulse purchases. Give to charity. Don’t take all of your paycheck to the store. After all, the last thing you want is to have to ask your son or daughter for a loan.