Delayed gratification—saving for things they really wantCharity and helping othersBudgeting
But many parents have questions about how much to give, what to do about chores, and other allowance policies. Here is what experts recommend. When you’re making the decision, consider:
What your child is now spending on the things you will expect the allowance to cover (say, school lunches, clothing, and birthday gifts for friends).What your child’s peers are getting, if you know.A base rate of one dollar per year of age every week or every other week. The idea is to have a formula that will slowly increase as your child gets older.An amount that can be split into thirds: One-third for saving, one-third for spending, and one-third for charitable contributions.
If they run out of funds before the next payday, don’t bail them out. Part of the point of an allowance is to learn how to prioritize and budget. Giving advances doesn’t help kids learn how to use their money carefully. Encourage or require your child to set aside a certain amount each week for short-term and long-term savings and for charity.
Tying allowance to doing chores. If the allowance is associated with specific chores, kids can stop doing the chores and say they don’t want the money anymore. Keep regular chores separate from allowance (keep giving the allowance even if your child fails to do chores). Instead, allow your child to earn money beyond allowance by doing extra chores—as long as regular chores are complete. Regular chores are just part of being a contributing member of the household. Withholding your child’s allowance as a punishment. Take away privileges instead. Doling out extra money. Don’t give your child money for extras in addition to giving an allowance. This means the allowance isn’t helping to teach financial responsibility. Starting too late. Between five and seven years old, most kids are ready to start learning about money and understanding the concepts allowances teach.
