In teaching kids about money, one of the biggest topics is allowance. To give or not to give, that’s the question! Providing an allowance is a decision parents struggle with and there are various opinions on the matter. One approach that works well for many families is starting with a weekly base allowance - about $1 per year of the child’s age - to cover chores the child is responsible for as a contributing member of the family, as well as a list of chores that can be completed for extra cash.
A list for an eight year-old might look like this:
Weekly Allowance: $8
Be specific about each task so your child knows when the job is complete. You may want to display the list of daily and additional chores in your child’s bedroom to serve as a visual reminder. Help your kids develop a weekly chart to keep track of chores they complete. Designate one day of the week as payday, and help your children add up the extra allowance they earned by doing additional chores. Encourage them to set aside a percentage of each week’s earnings for savings and charitable giving.
Now to the fun part…spending! Slowly start to shift spending decisions to your child. Don’t buy toys or clothes on demand; encourage your kids to save their weekly allowance to purchase what they want. It’s easy for them to spend your money, but it’s hard to part with their own! In addition to paying for toys and fun activities, have your child contribute to gifts for friends and family. This practice helps kids understand that sometimes we skip buying what we want so we can do special things for others.
However you decide to handle allowance in your home, try your best to be consistent and be willing to talk openly and honestly about how you earn and spend money. Your influence and example are their greatest teachers.