When do we start giving our kids an allowance? Age 7, 9, 12?
And how much is appropriate? $3, $8, $15 a week?
The rule of thumb is typically a weekly allowance of one dollar for each age. So, if a child is age 7, they should receive a base weekly allowance of $7; age 9 should receive a base weekly allowance of $9, and so on. But, we also need to be mindful of the child’s maturity and what they might spend their money on.
Before we start an allowance, it is best to discuss the reasons for receiving it, such as doing household chores. Do you have a chore chart at home indicating tasks like taking out the trash or washing the dishes after dinner? What about individual chores, like cleaning their own bedroom and washing the dishes they used to prepare a snack? You might also use an allowance as an incentive to do better at school. For instance, receiving $5 for every ‘A’ on a report card or $2 for every increase seen on their progress report.
Another point of discussion should be how to handle this newly earned money. An allowance should help teach children the importance of not only spending but saving and giving. When a child receives their allowance, it can be divided into three parts (spending, saving, and giving). This can be accomplished with the three-jar system: a jar for spending, a jar for saving, and a jar for giving. It is up to the parent to decide the percentage per jar. This way, the child will not only have spending money, but learn the core concept of saving and giving. Also, it will lighten the shock when they receive their first paycheck and realize all the money is not paid just to them.
So now that we have decided our child is old enough and mature enough, how do we pay the weekly allowance? For younger children under 10, I suggest using cash and the three-jar system because it gives them a visual of where their money goes. It can also be a great way to have them learn about saving for something they want to buy. For 10 years and up, try allowance apps such as BusyKid.com, Greenlight.com, and FamZoo.com, which all reinforce the core concept and are easy to use.
Finally, once you have set up a system with your child, take time to sit down with them weekly to review how everything is going. Look at their spending patterns; what are they spending their money on? Praise them on their savings and giving plan. Answer questions about their progress or struggle with money. Its important for kids to understand that planning for their money is the first step to building good, lifelong financial habits.
I will be offering a personal finance course for young teens in January 2022. If you are interested in more information, email email@example.com with “Personal Finance” in the subject line.
And remember: your budget does not need to be stressful. It is a habit that alleviates financial surprises.
Contact me today and set up a time to go over your plan and how to best execute it. The best plans are the ones we put into motion! My calendar link can be found at https://linktr.ee/Carlisacares.