Ask most parents if they give their kids an allowance and they’ll hem and haw…
“Well, we give them money occasionally when they need it.”
“Kind of, we tried it once but it didn’t really stick.”
But then there’s another group. The group who proudly declares:
“YES! We give the kids a dollar a week per year of age.”
This is actually the hardest response for me to hear. Yes, it’s great they are doing something, but I often wonder where this backwards idea was born.
Let’s think about this.
Most kids are ready to start handling a small allowance around age four. This means, given the scenario mentioned above, that child would receive $4/week or $16/month.
I ask you, what on earth would a four-year-old be buying for $16 a month?
Let’s go to older kids – a ten-year old. $40 a month? $480 a year? This gives a ten-year-old enough money to buy a new iPad. Every year. Which might actually be fine if that’s what they truly wanted to save up their money to buy.
All too often, however, this dollar a week per year isn’t truly for anything. It’s 100% discretionary income, or “fun money”, and the kids can spend it on anything they want.
While this may be a noble goal, it isn’t really teaching the kids much of anything except to be consumers of things they probably don’t need. After all, in this situation they aren’t receiving enough to cover their needs, the money is just going towards their current list of wants.
There is a better method. Turn this around.
Instead of deciding how much your kids will receive, decide what purchases you want your kids to start managing. This makes it much easier to determine how much money to dole out. A kid who is expected to buy nothing but toys and gum probably doesn’t need more than a few dollars a week at any age. But a kid who’s responsible for buying his own school lunches, clothes, and shoes is probably going to need $25 or more per week.
How do you know where to start? Look first at your own spending. Where are you spending money on your kids right now? Is it something the kids could be taking on as a responsibility? If yes, then you know where to start: give your kid that money, and let him start making responsible decisions with it.
Want to know more about how to get started? We have a free downloadable resource to help you figure this out, and get on the right track in raising your kids to be financially responsible.