| An allowance is an important part of growing up and | | | | the family, and are separate from the allowance. Like |
| plays a significant role in developing the ability to | | | | a lot of things about parenting, it's hard to say which is |
| manage money. Seen this way, your management | | | | right or wrong, or best for the child as a life lesson, and |
| and communication about it may be different than if | | | | much will depend on your own philosophy or |
| you think of it as just a tactic to control the inflow of | | | | worldview. You might consider a blend of the two |
| toys into the house. | | | | where certain chores (ex. taking out the garbage, |
| When to begin a kid allowance? Age six would be the | | | | emptying the dishwasher, and shoveling the snow) are |
| right time to start, after kids can count and begin to | | | | part of the family responsibility, while other work is |
| understand the price of different things they want to | | | | compensated by or outside the allowance. |
| buy. | | | | 3. Given that an allowance is a key aid in teaching |
| And, how much to give? A good rule of thumb is $1 | | | | money management, pay out the allowance at a |
| for every year of age, or so says TheAllowance:It's | | | | regular time each week without fail. Keeping a tight |
| Not Just About Money in the NewYorkTimes. Or, as | | | | schedule, like a paycheck, allows your child to plan and |
| the article counters, "half of that," noting that most | | | | budget, which are the skills you are trying to develop. |
| people decide the allowance based on a very | | | | 4. Consider putting away an extra sum for charity or |
| unscientific survey or friends and family. | | | | long-term savings so that the child can monitor this |
| The New York Times article cites a Yankelovich | | | | over the long haul. Avoid making this an accounting |
| study, breaking down allowances to $5 to $9 for six to | | | | issue by keeping the math simple (ex. $1 week = $52 |
| eleven-year-olds, and $10-$19 for 12 to 17-year-olds | | | | year into a charity fund to allocate at the end of the |
| (which conveniently fits the rule of thumb). Like so | | | | year) and only reporting on it at longer intervals, say |
| many things in the financial area you’ll have to | | | | quarterly. |
| figure out the most appropriate rate for your own | | | | Amazon has several books on raising smart money |
| area and child, and expect continuous negotiations, as | | | | kids , and the New York Times article recommends |
| your children get older. | | | | Raising Smart Money Kids by Janet Bodnar of |
| A few other things to keep in mind: | | | | Kiplinger’s Personal Finance (I have not read this |
| 1. Keep the allowance accounting simple and clear. If | | | | book). Much of allowance rules and amounts will be |
| you hold the money in your wallet for your child, keep | | | | subject to change over time as kids develop their own |
| written accounts that the child can monitor easily. You | | | | tastes and needs that fall far from the opinions and |
| don't want to be in a "he said, she said" situation due to | | | | view of mommy and daddy. Making a six-year-old pay |
| a few bucks. | | | | for their own movie with mommy and daddy is not the |
| 2. Experts disagree on whether allowance is an | | | | same thing as watching your 17-year old roll out the |
| "entitlement" or a quid pro quo for doing chores. Some | | | | driveway on her way to make her own movie |
| think it's important that the child see the value of work | | | | choices. Good luck with the evolution in your thought |
| to earn money, while others think kids need to | | | | process, while trying to keep a modicum of |
| understand that chores are a thing you do as part of | | | | consistency in your communications. |