Do your kids ever ask if they can have an allowance?
Let’s keep it simple. Yes, experts say that your kids should get allowances.
There are many benefits to this: you’d be teaching your kids the importance of being responsible with money, how to make smart decisions about what to buy, and that some things are just not important to buy.
The number one mistake that most parents make is starting to give allowances too late.
Experts say that you should start when your kids consciously have an interest in material things. This could begin as early as 3 years of age (I personally think that 3 years old is much too young…).
If you do decide that your kids should get an allowance, here’s what NOT to do…
Don’t associate allowances with chores. When your kids get older, get jobs, and start to make their own money, they’ll see chores as something they could put off – why would they do chores at home when they could be at a store, interacting with other people, having more fun?
Apparently an article from MSN believes that it’s OK for preschoolers to get allowances:
The amount of money should be minimal [for preschoolers] because children at this age tend to lose or misplace money. That’s OK. It’s all part of the learning process.
Really? Since when did losing money become something that’s OK to do?
Do you think kids should get allowances? At what age? Do you agree that preschoolers are much too young to get an allowance? Do you give your kids allowances? How’s that working out?
Should Your Kids Get An Allowance? [MSN]
{ 1 comment… read it below or add one }
I’m in favor of allowances as a way for kids to learn and practice sound financial habits early in their lives in a safe/nurturing envirnment.
I generally like the AgeInYears x $1 algorithm for a general spending allowance, but found it to be a bit high in the early years. Every family’s mileage varies, but we’ve used the following framework with our 5 kids (7 to 19yrs old now) with good results:
Under 6yrs no allowance but collect spare change in sofa/car/etc and put in BankOfMomDad (learn the basics of bank/money),
6-9yrs allowance of AgeInYears x $.66 splitting 80%/10%/10% between Spend/Save/Charitable (learn to make spending tradeoffs and intro to saving and philanthropy). We don’t tie the allowance explicitly to chores (just expected), but we ding them when they blow off their chores to teach accountability/consequences.
10yrs thru middle school AgeInYears x $1 split 80/10/10 (address slightly higher spending needs),
highschool same + additional allowance for entertainment and clothing (annual) (learn some budgeting basics and what it means to blow one – i.e., go without!)
Have also used simple loans effectively for big ticket items like a laptop – they appreciate and take much better care of items when they are paying them off each week over a long period of time.