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Tips on Giving Your Children Allowance Money
Giving children allowance money can help them become financially responsible adults.
Beginning an Allowance for Your Children
Giving children allowance money is a source of debate and frustration for many parents. Their goal is to teach their kids about money and help them learn responsibility at an early age. However, the allowance children get often ends up just teaching them that they like to spend it. If you are going to follow the tradition of giving your kids an allowance, you need to have a plan and rules to follow (for yourself as well as your kids).
Do Kids Need to Earn an Allowance?
This area is one of the hottest topics of arguments between parents. Some people believe in giving them a base amount of money and then adding to it for work they might do. Others say that they should have to do chores in order to get any allowance money.
You need to decide this answer before you begin giving your children allowance money. The best advice is to keep it simple. Instead of trying to figure how much a child can earn for washing dishes, walking the dog, or other tasks, stick with a simple dollar figure.
Another issue in dealing with children and allowances is if they should be paid to help out around the house. As a member of the family, isn't that expected? Some parents give clear expectations on what regular chores should be done without pay and then provid money as an incentive to do extra.
In general, most experts say that allowances and chores should be kept separate. The allowance should be a set amount that you determine and is not tied to any kind of work. You have two separate lessons you are trying to teach: one about being helpful and doing your part and the other about handling money responsibly. They can learn about getting paid when they are older and look for work to get additional spending money.
How Much Allowance Should Children Get?
This is something else that should be determined at the beginning. The most popular way is to base it on their age with adjustments at each birthday. It can be $1 or even $.50 for each year. Just don't forget that things cost more now than they did when you got an allowance.
Another way to determine the amount of your child's allowance is to figure out what they will spend it on and choose a reasonable amount. Younger children will be happy with small toys or snacks and won't need as much. Older kids will require more for what they want to buy.
The main factor is how much you can afford. The best way to teach your kids about money is to be responsible with it yourself. Don't get in a competition with your kids' friends over allowance.
Tips for Making Your Children's Allowance Work
Rule number one: don't give in and buy them something when they run out of money. If they have already spent their allowance and see something else they want, let them know they can get it on their next "payday." This will teach them how to think ahead about what they want to spend their money on.
Here are some other tips for teaching your children about money with their allowance.
- Have them put a portion in savings. Most experts recommend 10%. When they are young, this may mean saving it for a few weeks to buy a more expensive toy. As they get older, it should add up more.
- Parents should allow their kids to spend the allowance on whatever they want, as long as there are no moral or legal objections. They have control over how the savings are spent, but not the extra money. If you give your child some responsibility on making decisions, she will learn to make the right ones. Of course, this may be after she makes a few wrong ones.
- When your kids are older and especially if they are earning their own money through a job, they can be responsible for buying some of their own clothing and school items. However, when they are young, you should provide for their needs. This way, when they spend their money foolishly, it will only hurt their feelings and not leave them lacking anything important.
Remember the Ultimate Goal
Your goal in giving your children allowance money is to teach them to be responsible adults who can manage a budget and paycheck. Don't get sidetracked over little issues but keep your goal in mind. If something isn't working, reevaluate. And always remember to explain why you do what you do so they can learn the lessons you are trying to teach. You never know, you just might raise your child to be a millionaire. And it all started with a $1 allowance.