What’s The Best Way To Give Allowance? (Your Advice)


Your Advice - help answer readers' questionsKids and money. It is an important subject, but one where if can often be confusing on what is the best way to teach financial fundamentals. That is the question that this reader asks:

I am looking for suggestions on the best way to give allowance to my kids. One is 10 and the other is 11. Is it the proper thing to give a set allowance without any work required, or should I be giving an allowance based on the chores that they perform each week? I want to give them a good financial base, but I an confused by different reports on what is the best way to approach this. I would like to hear suggestions of what other people have done with their kids and what seemed to work the best for them.

I’m also curious about how much I should be giving my kids? Is there a standard amount that kid should receive at each age?

Finally, should I force my kids to save a portion of their allowance and put a portion of the allowance toward giving to charity? Or should I let them choose to do that on their own and just suggest it? Any enlightenment on all these questions would be greatly appreciated.

For those who have kids or those who have made plans for how to teach finances when their kids get older, what advice would you give to this reader?


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May 23rd, 2007
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Comment Number:
1
Written by:
mitchell
Posted on:
May 23, 2007 at 7:15 am

what my parents did for me is give me some basic chores that i had to do, and paid me a base allowance. on top of that, if there were any other chores that needed doing, i was paid extra to take care of them, as they were done. if i needed extra money, i specifically asked to get more chores.

did two things — taught me that i had to work for money and that if i wanted more, i had to work more.

i think that whenever i have kids, thats the system i’ll probably use.

Comment Number:
2
Written by:
Dy
Posted on:
May 23, 2007 at 9:17 am

My parents decided to give me allowance regardless of whether I did chores or not. Chores were expected and if not done to contribute to the family, would be dealt with grounding or other punishment, but not withholding of allowance. It taught me how to budget and save. I’m not sure if that’s the most effective way to teach kids about money but it worked ok with me.

Comment Number:
3
Written by:
Traciatim
Posted on:
May 23, 2007 at 9:43 am

I’m of the belief that chores that are a requirement of living in the house should be independant of the allowance. Extra chores should include extra benefits (not necessary that they are financial).

For instance, I use the rule that when I get paid, the kids each will have their age given to them. This is usually every two weeks. Currently they are only 5 and 2, so they aren’t getting it too well, but it will provide a base for the future.

I also use the rule that if you put money in savings that I will match that money. So for instance if my 5 year old puts all of her allowance in savings then she has the potential of making $10 every two weeks.

This hasn’t been too sucessful as of yet, but I think that this will pay off later when they get to be 8 or 9 and really understand money and spending. I haven’t quite established rules on how to handle withdrawls from savings. I was thinking of making it so that on the 1st of every month they can come to me and ask to make a withdrawal for a specific purpose and make a case as to why they need to use their long term savings. That way if they want something on the 15th, they have to wait until the 1st to make their case, and that will teach them a great habit for when they leave the nest to think about their purchases.

Comment Number:
4
Written by:
Michael
Posted on:
May 23, 2007 at 10:39 am

I had a list of chores to do every week, and got an allowance based off of how much got done. Although I always got money, sometimes even if all the chores didn’t get done.

Looking back, what I don’t like about it is that it only taught the “trade hours for money” mindset, which I am currently overcoming.

I haven’t actually figured out yet how I’ll do allowance with my future kids, that’s partly why I read all of these blogs and get ideas :)

Comment Number:
5
Written by:
Rogan Creswick
Posted on:
May 23, 2007 at 1:39 pm

I don’t have any children of my own, but the way I was raised made me feel very strongly about giving anyone money for nothing.

I was never given an allowance, although I did do small things around the house for (equally) small fees. (Doing all the laundry would net me enough to buy a workbook of math problems–probably equivalent to a couple pieces of candy. I’m a geek, so I did enjoy the math.). This stopped entirely at a pretty young age, probably second grade or so.

From that point on, I budgeted from one of two sources: Money I made on my own and holiday/birthday gifts. All in all, my life hasn’t changed much in that respect since I was 12-13. If I wanted something, then I had to find a way to earn it. Once I’d found a way, my parents / family would help me get it done (at times they would contribute more to my endeavor than I would ever make, but I learned an *enormous* amount about finances anyway).

I also ended up buying things much more carefully, since it would take 2-3 months or more to save the money for what I wanted. For example, I never bought candy, since the return on my investment was so low (5 minutes of enjoyment for $1!? You’ve got to be kidding me!). At times I’d decide to sell something to upgrade, or trade things with friends. I never felt deprived because I saw how poorly my friends spent their allowance, and compared to what I was able to earn for myself. It also meant that I spent much more time *making* money than playing with the results, and I had fun doing it.

–Rogan

Comment Number:
6
Written by:
Jody
Posted on:
May 30, 2007 at 11:28 am

We give our son an allowance and he has 3 coffee cans that he has to split the allowance into. 1/2 of the money goes into the spend can and he can spend this any way he pleases (within reason), the other 1/2 is split b/w a church can & a bank can. The church can is for church or other charities that he would like to contribute to and we opened a savings account for him to deposit his bank can money when it gets to be $10. He only get a couple of dollars a week, he is only 5 so it takes a long time to get to $10.