Should You Give Your Child an Allowance?

Every family has different opinions on whether or not their children deserve an allowance. An allowance is a definite privilege, but it can also be a very beneficial learning tool on how to handle money. If enforced correctly, your child will be able to learn the value of a dollar at a young age.

Here are some guidelines for deciding your child’s family allowance:

How Much Should You Give?

Before you decide to give out an allowance make sure that it won't be taking a substantial chunk of money from the family income. When you are budgeting check to see how much you can afford to give out and whether or not you will be able to increase the allowance as your child grows.

Although the way other families conduct their allowance decisions shouldn’t be a factor that influences your decision, children talk amongst each other, and your child may feel pressured to receive a similar allowance as their friends. Many parents factor in the economic class of the neighborhood, which is typically tied with income.

The best thing to do in this case is be open with your child and explain that an allowance is a privilege and opportunity and not everyone gets an allowance. This also may be a good time to talk about when it is appropriate and inappropriate to talk about money.

The actual amount you decide to give your child might depend on his or her age. The younger your child is the less money they should receive. Some people set their allowance with a direct relationship between dollars and years. So your 6-year-old would be getting $6 a week and so on. Many financial blogs and websites tell you to adjust this amount to correspond with your child’s lifestyle as they get older, but at MyBankTracker we believe there are better ways to teach your teen smart spending. If your child is old enough to hold a part time job, it is perfectly acceptable to expect them to manage their own finances.

Turn an Allowance Into a Learning Experience

Make sure to set up some guidelines once you have established a weekly or monthly allowance. You must explain to your child what the money should be used for and what you will not be buying anymore. Certain snacks thrown in the shopping cart at the last minute, the latest collecting craze, movies or clothing are all products that your child could put his or her allowance toward. This way your child will learn to save money and choose more carefully where to spend it.

Another thing that could be beneficial to you as well as your child is exchanging money for chores. Children should help around the house whether or not they are being paid, but giving an allowance depending on chores could help teach responsibility and the value of a dollar.

Overall, an allowance is not just a thing that parents give to spoil their kids. Laying out rules and guidelines and talking about money with your child will definitely help him or her have stronger financial literacy at a young age.