To Allowance or Not To Allowance

Parents have a lot of important decisions to make with regard to their kids. One decision that’s sometimes overlooked, although still important, is whether or not to give an allowance. Here are some thing to consider when deciding if you should give your child an allowance.

Pros Of Giving Your Kids An Allowance

1. An allowance can teach kids about finances, responsibility and the consequences of poor financial decisions.
2. If the allowance is tied to chores, kids learn the relationship between work and pay. Helping your child understand the correlation between work and reward will set them up for their future careers.
3. It gives kids spending money for non-essential items such as toys and video games.
4. Using an allowance as an incentive motivates kids to get their chores done.
5. If you use an allowance to reward your kids for good grades, it could help them get into a better college or even receive scholarships.
6. If you require donating as part of your allowance system, this can teach your kids the importance of giving to those who are less fortunate.

Cons Of Giving Your Kids An Allowance

1. An allowance may undermine the importance of contributing to the family. Your kids may get the perception that duties always deserve a reward instead of simply doing their share for the family.
2. Paying kids for doing chores teaches them that working for money isn’t always fun.
3. Kids may not be motivated to do chores when they don’t need money or they have saved up enough.
4. It may be challenging to give an allowance if you are on a small budget but have a large family.
5. An allowance may open the door to kids making poor financial decisions when spending their money.

What Age Should You Give Your Kids An Allowance?

If a parent decides the pros outweigh the cons, at what age should a kid begin receiving an allowance? This may depend on the development of the child. The child-development experts behind Sesame Street have determined that children as young as 3 understand the difference between wants and needs. This may be a prime time to start. If you feel as though this is too soon, you may consider starting once they begin to lose teeth. The monetary reward for losing teeth may be a good intro into a new reward system. Every child learns at a different rate. Determine what you’re comfortable with.

How Much Allowance Should You Give Your Kids?

1. A popular way to determine the amount of money earned per week is the age of the child. For example, if the child is 7, maybe they could receive $7 per week. Then as they age, you could increase the amount.
2. Another philosophy is to give the child half of their age. This allows you to ease into the process.
3. You could also base your child’s allowance off the complexity of the task or chore they complete. Each chore could have a different value.
4. Other parents choose to base their allowance on their child’s grades. An example would be to reward your kid for every “A” they receive on a test or every “A” they receive on their report card.

Methods Of Giving Your Child An Allowance

After you’ve established an allowance amount and requirements, it’s time to decide how you want to distribute the funds. One method suggests you put the money in a jar or a piggy bank. This method helps your children grasp the concept of putting the money away themselves and to physically see their funds grow over time.

Once your child gets the hang of depositing their money and watching it grow in a jar, you may want to consider using additional jars for spending and donating. Then your children can put a designated amount in each jar. This process gives them the responsibility to manage their own money and save for items they desire. It also teaches them the value of savings.

The Bottom Line

Every family is different. Determine what may work for you and your family. Establish a clear system and guidelines. There is no one right way to give your kids an allowance.

Your child or grandchild should also have their own savings account at WKFCU.

Scottie Savers for ages birth through 12 years old
Extreme Teen for Teen 13 to 17 years old. Teens 16-17 can open a checking account and get a debit card.

July Kid’s Bash

1. Kids accounts can be opened for FREE
2. Open a new kids account or make a $25 deposit into an existing account and receive a special gift bag.
3. Thursday Kids Cash Giveway -- One Scottie and one Teen will each win $25.
4. Tips to help parents raise Money Smart Kids -- check out our facebook page or watch for an email. Details on our website, www.wkfcu.org