Step #65: Kids and Money: Allowances

If your children are old enough, consider giving them an allowance. An allowance provides them with opportunities to learn how to manage money – including learning from their mistakes. I really like “Three Little Pigs” format which emphasizes saving, spending, and sharing.

You may come up with different ways to allocate the allowance money, but here’s an example: Let’s say you give your child $6 per week. $2 would go in the spend jar, $2 would go in the save jar, and $2 would go in the share jar.

SPEND
This is for your child to spend, no questions asked. It goes into his/her wallet or piggy bank for the toys he wants, treats at the checkout, and everything else. This is where you can give him or her flexibility to learn from his mistakes. It’s interesting to see if your child can grasp the concept of delay of gratification – waiting until the money adds up to buy something bigger or to continually spend it on smaller things each week.

SAVE
This money is saved, not to be touched. When your child’s “save” jar gets filled, consider transferring it to some sort of savings account so that he/she can watch his bank balances grow. Many banks offer programs just for kids, such as this one from Wells Fargo which offers a parents’ matching program and online banking:
https://www.wellsfargo.com/jump/savings/kids

SHARE
This is the money that goes to benevolent giving; church, other charities, or friends in need. If you child gets $2 to share each week, part of that could go towards the offering at church. Another dollar could be put towards a larger donation to things your child deems important – the playground fund at school, the Humane Society, etc. This gets children to focus on their blessings and realize there is always someone less fortunate than they are.

Assignment: Come up with your own allowance plan for your children. What does yours look like? Do you tie it to chores?

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My DD is only 2.5 we probably have at least another year before she gets the concept of money does more then feed her piggy.

We are doing a set up to savings. $5 a month is Bethy's "allowance" she never sees it but I can always print our the statement and show her every month $5 going in and the interest that she gets every month and how it grows everymonth. We also throw birthday money in to Bethy's savings.
It adds up at 2 1/2 we are nearing $400 and she gets 0.33 in interest every month up from .02 when we first started.

I like the idea of splitting up an allowance but I also think she needs to start earning it and right now we are working on the concept of earning something. We are doing potty training sticker charts for dollar tree toys. Oh and learning numbers thats important now.

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Kimberly Proud Mommy to Bethany Rose April 2006 &

Organizer of the Coupon Clippers of Tacoma

DD & DS #1 get $5 a week and DS #2 & #3 get $2.50 a week. They tithe and save up to get things they want. DS #3 saved 10 weeks to get a sound action whip that he really wanted. They have also figured out that if they split things they want, like a DVD they can all benefit from chipping in.

Now, they are not tied to chores, HOWEVER, if DD decides she is too good to do dishwasher duty and I or one of her brothers do it, she has to pay $0.50 to whomever does it. If DS #1 decides he doesn't want to sweep the kitchen/foyer/laundry room, he has to cough up $0.50 to whomever does it and so on. Since I have instituted that rule, they have jumped on whatever it is I ask them to do. I tell them that with 6 of us we all have to pitch in to make the house run smoothly, it's their 'job!' So when they choose to not do their job, they must pay the one that does it for them.

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I like that idea.

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My boys each get $5 a week for allowance. $1 of that goes into savings, $1 is for giving (tithe, or other cause if they choose) and the rest is spending money. Its not tied to chores, but in the past we have taken money away for things (10 cents every time they leave a light on in a room, etc. for a month to break a bad habit!). In the future they will have opportunities to earn extra money by doing special chores. My oldest is learning to mow the lawn and he will get paid for doing that, for example.

What do you think a reasonable weekly allowance is for two boys ages 16 and 11?

What type of "expenses" do you expect them to pay for? If they go to a movie with their friends, does the allowance cover that? If they have to buy a gift for a friend, do you expect that to come out of their money too? What types of chores are they expected to help out with at home?

I've heard that a good rule of thumb is $1 x their age/per week if you expect them to cover certain expenses on their own, otherwise you could deduct a little bit from that. My daughter is 9 and gets $6/week ($2 of which she gets to spend), so we're under that amount - but we also buy gifts for the friends and provide extra if she's invited to a movie. Really, it's a personal decision and one that should be in line with your budget and what is expected of your child in return.

HTH

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I think the greatest thing my parents did for me when I was growing up was to sit us down and go over the family budget. From there we all talked about the amount of time each one of us spent at our jobs (mom and dad at work, us at school and doing our homework). Then we worked out a plan on how much each job other then our regular jobs was worth. Next we broke them down into who could do the different jobs. I was old enough to do some jobs, but as an example not old enough to drive to the market to do the shopping. So that was not a job open to me, but there were plenty of jobs that I could do and so a chart was made and the jobs and values were assigned.

Not all values were cash in hand. Some were special outing, like going to the movies. Others were special time with one parent of the other or getting to pick the game for game night or what we were going to watch that night on T.V.

We were responsible for making our own money through this system and learned the value of a dollar and how to save it. Hope this helps.

My son is 8 and gets $5 a week. He saves it to buy whatever toys, video games, or computer games he wants. Right now I am very broke, so when he got invited to chuckie cheese, I told him he had to use his own money. If his friends have a birthday, I will usually buy the present. Allowance is not related to chores. If he doesn't do the chores, that is a whole 'nuther punishment all together.