Giving children allowances is a hot-button parenting topic. My own family didn’t believe in allowances and my wife’s family did. After many conversations, we worked out how we would give allowances out to our children without spoiling them.
Start Giving Money Early
Instead of waiting until your child is “old enough to need money”, start them early. By starting around 5 years old and when they can start counting, you can get them comfortable with using their own money to spend and save.
By following this method, your child can learn basic money saving and spending principals before they are older and have things they “need” to buy.
Calculate Allowance Based On Age
One of the biggest potential pitfalls of allowances for children is handing out arbitrary amounts of money. While it may make sense to give $20 a week to a teenager, it certainly is not necessary for a 7-year-old. Yet many parents will give the same amount of money to avoid favoritism.
In my family, we use the age method. The child receives a dollar for however old they are: my 12-year-old will receive $12 weekly, while the 16-year-old receives $16 weekly. It is simple and surprisingly, no one argues that it is unfair. It helps that if they want more money, we have a system for that as well.
Don’t Pay For Normal Chores
Allowances are handed out without strings attached. This was hard for me, as it is tempting to take away an allowance for chores not being done or use it as a disciplinary tool in other instances.
But this can create an arbitrary power balance that can be damaging to children. I also do not want to encourage my children to feel like they have to be paid to be contributing members of the household. So they fulfill their normal chores with no connection to their allowance. However, my children can fulfill extra jobs for more money.
We have a job board in our home with extra household chores that can be done for the fixed price listed on the board. Repainting the fence can net one of my children $30, which they can split the job and money with a sibling if they need. They also know they are only paid if the job is well done.
When The Money’s Gone, The Bank Is Closed
My main resistance against allowances was that I didn’t want my children to treat me like a money tree. So we established that once the children’s money runs out for the week they will not receive more until the next time we hand out allowances.
My children’s loan schemes would make a money lender proud. I’ve had them ask for advances to be deducted from their next allowance, offers of interest building repayment, pawning of toys as they tried every way they could imagine to get more money. But we have held firm to this rule and it has paid off.
My children are much better at saving money than I was at their ages and I do believe giving them allowances has played a large part in it. I suppose watching 2 of your siblings being able to buy a treat you can’t afford makes a lasting impression!
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