It's estimated that about half of all families give their children an allowance. But how and why they give their kids an allowance varies. Wondering what you should do? Here are seven things to consider.
Why should I give an allowance? Historically, the allowance started as a way for kids to practice handling money. The idea was for kids to learn how to save money, budget their money, and get experience making basic purchasing decisions.
When is my child ready? If your child still believes that because a nickel is bigger than a dime, it must be worth more, he or she is probably not ready. When kids have acquired basic math skills they may be ready to handle an allowance. Your child's interest and overall maturity are also factors. Of course, you should never give money to kids who will put it in their mouths!
Should an allowance be earned? The American Academy of Pediatrics suggests that kids learn responsibility by having an allowance that's linked to the completion of tasks. But other experts feel that kids should do their chores because they are part of the family. In some families, kids receive a regular allowance but can earn extra by taking on additional responsibilities beyond their basic chores.
How much should my child receive? It depends on how your child is expected to use his allowance. Kids can gradually become responsible for purchasing both necessary and optional items. Calculate the amount your child will need to pay for basic expenses (if she's old enough to be responsible for these), have some spending money for extras, and have some to save.
How can I keep track of what I've given? Create a bookkeeping system. Use a notebook or chart to record when you've given your kids their allowances.
How can I get my child to save? Some surveys have found that younger kids are more prone to save than older kids. So help them start early. If there's something special they want, help them calculate how much they must save each week in order to purchase that dream item. Some banks will allow kids to open their own savings account, which can be an incentive to save. Older kids can be helped to learn how to invest some of their savings.
How can I encourage my child to be charitable? Help your kids select a specific charity and donate a portion of their allowance. Look for one that has personal meaning to the child, or that offers a visible way of seeing the results of their giving.
If you subscribe to Highlights ®, both of you could read the story, "No More Allowance" by Debra Smart, in the February, 2008 issue. In this story, a boy discovers what happens after he's convinced his mother to base his allowance on specific chores. Talking together about this story may help you and your kids decide on an allowance approach that works for your family.
The November, 2007 issue of Highlights High Five™ has a craft feature that encourages children to make a set of three banks in order to begin to learn to manage money. Help your young children cover containers with colorful paper. You can then make slits in the plastic lids to create the banks: one for money to share, one for money to spend, and one for money to save.