How much did you get as an allowance when you were a kid? Have you been thinking about or already give weekly or monthly allowances to your children?
About.com has an easy allowance calculator
that’s free and quick to use. You can plug in the numbers you already allot to your children or use it as a reference to help you decide how much to start giving as an allowance. The tool gives an allowance amount recommendation based on the child’s age, as well as how much today’s recommended allowance was worth when the parent was that age. (Purchasing power is figured using the Consumer Price Index.)
Common advice on setting an allowance is to give $.50 to $1 per week, per year of age. Benefits of providing an allowance to your children is that it gives them an opportunity to learn how to spend and save based on limited resources, as well as how to budget from an early age. Lending Tree’s article
on this subject mentions that there is “no right answer about how much is appropriate” because there are different factors for each family. Those include:
- Your children’s ages and expenses
- Your financial means
- Your attitudes toward money
It also depends on what you expect your child or teen to use their allowance for. Once your child is in the double digits, you might want to be more specific about tying it in to their weekly expenses, and can budget for whatever you want them to pay for and manage, including bus fare and lunch money. Be sure to make it clear what you will pay for and what your child must pay for and continue to have those conversations as your child gets older and expense amounts, wants and needs naturally change. Experts also suggest instilling savings habits early on, and make sure some allowance money is set aside each period to go into savings.
CNN’s Money.com has a great series of “Money 101” lessons, and Lesson 12
is all about “Kids and money
.” Helpful points including talking with children early about money, using allowances as a teaching tool, how to get your kids to save, and preparing teens for credit and investing. One interesting section acknowledges that some parents say that as their kids get older, allowances give them a reason to beg for more or to get a raise. But Jayne A. Pearl, author of Kids and Money: Giving them the Savvy to Succeed Financially
(1999, Bloomberg Press) says that allowances are supposed to be a teaching tool, and that “negotiation skills are an important part of that, which they’re going to need for dealing effectively with friends, teachers, and, eventually, their bosses.”
Be sure to periodically check in with our blog for additional allowance tips for parents!