Question About Allowances

We did a lot of searching on this topic last year when the question of allowance came up at our house. We wanted to start teaching our children how to handle money and wanted to have it separate from chores also for the same reason. Here's what we are doing (our kids are 5 and 7 years old):

Each week our children get half their age as allowance, so the 5-year-old gets $2.50 and the 7-year-old gets $3.50. They divide it into 3 parts--10% to their giving bank (it goes to church), 50% to their savings bank, and 40% to their spending wallets. (I work out the percentages for them.) So next year when my son turns 8, he'll get $4 a week--40 cents for the giving bank, $2 for the savings bank, and $1.60 for his wallet.

It doesn't sound like a lot, but for us it's just enough and has worked out great! It gives them enough money to buy a pack of gum or something from the dollar aisle each week, or they can save for a couple weeks to get something a little bigger. When their savings bank has at least $10, then they are allowed to spend it, or continue saving if they wish. (By the way, they supplement their allowance by taking care of recylcing cans and bottles which gives them a little extra once and a while.)

It's important to decide what the purpose of having an allowance is and explain it to them. Our kids know that they are learning to make choices with their money, just like mom and dad have to choose to say no to some things so that we have money for other things (especially the household bills). And it has been great with our family budget because I buy much less for them from the toy aisle. When ever they want a new toy, they know that it's something they can save for if they really want it, because they are going to have to buy it with their own money. But I have discovered that I have little spenders who feel the need to spend as soon as they have any money, so I'm glad they don't have any more to blow during the week. And I notice that they are finally starting to get a bit wiser in their spending decisions, but it's going to be a long learning process with them....

I know others give their children more allowance, but may expect them to buy particular things with it also, like school lunches or clothes. I think the key in general, though, is that they have just enough to be able to get something small, but not so much that there is no incentive to save up for something bigger.

Here is my favorite article about allowances, which you might like, from Crown Financial:
Children and Finances, Part 1 http://www.crown.org/LIBRARY/ViewArticle.aspx?ArticleId=342
and Part 2 http://www.crown.org/LIBRARY/ViewArticle.aspx?ArticleId=343
but there are a lot of different views out there. I'm sure you'll get lots of other good advice from the moms here.

3 moms found this helpful

I've gone back and forth about money tied to chores. I think kids should do things because it is part of being a family. So my kids have certain chores they don't get paid for. I also want them to know they have to work for their money. I have to work for mine, so it attaches "I worked hard for this money so I don't want to blow it on something silly." They still blow it on silly things but we have this discussion often, so I hope they are learning. I pay them 25 cents to 50 cents for certain chores. They earn roughly $2-$3 a week. (they are 10 and 6) Since I don't want to keep handing them quarters all the time, they have a sticker chart that they keep track of their chores and then I pay them every few weeks or if we are going some where that they might want to spend the money (a museum, or family outing). I like the idea of having them save some of their money (for college), and they do have money they get for holidays for that purpose. My next step is to build in the money for charity. That is also very important.

1 mom found this helpful

Check out Neale Godfrey's A Penny Saved. We read it just before we started giving our kids allowances (oldest is now 16). It really helped us think through all that we wanted to teach our kids about money.

You'll love the story about her getting the lion. Taught us not to say, "Sure, honey. If you can save your money, you can buy _______ (fill in the blank)" Because she did and she did.

1 mom found this helpful

what do they get allowence for? My kids are a part of this family and help out! Make their bed, feed the dog, pick up gameroom, etc. If they do extra things like empty the dishwasher, fold laundry, etc they can earn about 50 cents. We don't spoil them, but my 8 and 5 year old don't need to buy anything. We do help them save...if they get $ for b-days, holidays, first communions, etc...and decide to put it in the bank to save instead of spend, we match it! $10 here...$20 there...they LOVE it! And it sure is teaching them the value of $! Not sure what to tell you on what is FAIR! Good luck!

1 mom found this helpful

We haven't started with our 7 year old yet. I guess when we do I'll do a combination of what my parents did and something a friend shared with me. Here's how it would work...

He would get $8 (a week, a month, whatever you decide). Half of it needs to go to his savings account, then half of what's left goes to a piggy for Christmas and birthday gifts. Then he'd have $2 left over to do with how he pleases. My mom had index cards filled with out-of-the-ordinary chores (washing the car, cleaning the floor behind the toilet, weeding the garden, etc). Each chore had a set amount from .25 (for dusting porcelain figures) to $2.00 (for cleaning windows). If you completed an item you had to put your initials and the date on the index card and she would go through the cards once a month a pay everyone for their extra chores.

Good luck!

$8 since he is 8 years old. Then he has something to look forward to when he is 9!

I too do something similar to the last few ladies. My daughter is 10yrs old. We give her $3 a week and it's not tied to chores. Doing chores is part of being the family and everyone has to help. Out of the $3 she puts $1 into her "savings" money. When we've gathered enough ($10 or so) we take it to the bank to deposit. Then $1 goes to her gift money. This is used to buy birhtday or Christmas presents for her dad and myself. It helps teach her to budget and she feels great using her own money. The other $1 goes to her "fun" money. This is money she can do what ever she want to do. She has learned that it's better to save it for a while so that she'll have more money to buy something she really wants. At the beginning all she wanted to do was spend it but it's taught her to save now. I know $3 doesn't sound like a lot but we think it's just right amount for her at this time. Good luck!
M.

I really like what Noelle M. says she handled this. Very smart! I did want to add one thought about money for chores though.
When it was time to start our kids on allowance it seemed impossible to balance the idea of being paid to do what you should be doing anyway, and the idea of just giving them money for nothing. Our solution was to explain to them that doing their chores on time and without complaint was a way of showing they can be responsible for their share of the family work (cleaning, pet care, trash/recycling etc.). If they could show us they were responsible with the work, we'd know they could be responsible for their share of the family money. The key was the word 'responsible'. Responsible doesn't complain, or whine. Responsible doesn't need to be constantly reminded or nagged. Responsible knows what needs to be done, and when, and just does it. So my kids get one cheery reminder, like - "Don't forget its Tuesday." (trash day) and that's it. If they don't do it, or moan about it, there is no allowance that week. They still have to do it, and all of their other chores that week anyway which is just part of being a member of they family, but they don't get any money. This has worked very well at our house.

My friends always gave their children an allowance of 50 cents per year of age. So your son would get $4 per week or $16 per month. This does not seem like a lot, but for an 8 year old, it should be adequate. As a parent, you will still be paying for essentials and his allowance is for the little extras that he wants. My oldest loves to go to Jamba Juice with his friends.

The reason I suggest such a low amount is If children are given too much, they do not learn the value of their money or of saving. If your son wants to "earn" additional money to save up towards something expensive, provide him with chores over and above his regular ones or have him help with yours.

Also, I would recommend that you encourage your son to bank and save at least 1/4 to 1/2 of his monthly allowance. It is important that he learns to "pay himself first" because he might want/need something and the wonder of having all/most of it already in the bank is great feeling. Maybe let him go wild with spending the first month and then begin to save. These are important lessons that I never learned and am trying to teach my children based on advice from economists and parent educators.

Hi V.,

I don't know what is fair, but this is what we do:

My 8-year-old gets $1.75 per week. I increase the amount by $.25 each birthday, so when he was 7 he got $1.50. He has 3 wallets: one for saving, one for spending and one for donation. So actually he gets $1.75 times 3 because he gets that much for each wallet.

E.

We have done $1/week for 1st grade, $2 for second grade, etc.
When they're older (HS) and buying lunch, we gave $5/day in addition. Hope that helps.

We also seperate out chores from allowance. There are additional work around the house that they can do for additional money. The price of the additional chore is negotiated. (Teaches them negotiating skills). Basically they get $1 per year until 12 years old, then they get 1 1/2 times their age. By about 14 or 15 years old they negotiate with their father for how much they "need" per month (key word - negotiate). This negotiated amount covers any food bought outside the house (ie lunch at school or food eaten with friends), entertainment, clothes, presents for friends, and when they start driving it includes gas money. We believe this helps them learn to budget their money. My oldest is great he saves most of his money. My daughter would prefer to spent it all, but she has had a few months where she has no money for the last week of the month. My kids are 17, 15, 12, & 8. Hope this helps.

Here's my 2 cents-- start low-- you can always increase it. I'd say $4 seems fair-- it will buy a small toy in a week, or he can save for a couple weeks and buy something bigger. I recommend 'The First Bank of Dad' for suggestions on helping kids learn to handle money.

We do something like Noelle's family. We divided it into 4ths. 1/4 for now, 1/4 for later, 1/4 for giving, 1/4 for long terms (college). If she wants to use her Later money, the item has to be on her I Want List for 30 days. Anything that costs more than her weekly allowance, goes on the I Want List. At the end of the 30 days, she evaluates if she still wants it. If not, she marks it out. It's amazing how many "I have to have this" have been marked out.

We give $1 per year,but added the other long term savings.

I also slip $10 a wk in a savings account for long term.

Stephanie

I really like the post of the person before me. Great job!

Might consider the things that your son is in to. If half of his age in dollars would work then go for it. You don't want to make it too easy to buy the things that he wants, but you also don't want to make it so it takes months to save up for the little things.

Our son is 7.5 yo & we started allowance this past year. We recently re-vamped it & are now giving him $5/wk not tied to any chores. We thought about the $1/yr of life but felt $7 was a bit much. As far as getting him to save, we tell him he has to leave a certain amount of cash in his wallet & then when the next allowance day arrives, we tell him however much is left in his wallet, we'll match that for him to put in his savings sccount that his g-ma has for him.