Should We Consider Giving Our Kids An Allowance?

Hopefully my readers can weigh in on this question regarding allowance.

The Allowance Question

Our kids are 6 and 4 and we have started talking about whether we should consider giving them an allowance.  Both kids definitely understand the concept of money, so far as that if you want to buy something that you have to pay for it.  Our oldest definitely understands that you have to have enough money to buy something.  He even gets the concept of debit cards, in that the money is in the bank, and that the card means that they’ll take it out.  We haven’t gotten really into credit cards just yet, but that’s just fine with me!

But, both of our kids love ‘buying things with their own money’.  When there’s a toy that they really want, they’ll often offer to pay for it with their own money.  And, they do!

So far the source of the money has largely been from birthday gifts, Christmas gifts, or other gifts of money, and so we’ve been thinking about adding an allowance.

Some Questions

  • Are 6 and 4 old enough to give an allowance?   (Initial answer: Yes, based on their basic understanding of money so far.  I think it also opens the door for teaching opportunities).
  • If we started with the oldest, should we start a smaller allowance?  (Initial answer: I’m thinking yes but am open to thoughts).
  • What would be appropriate amounts?  (Initial answer: I’m thinking that maybe tie it to their ages, so $6mb-201403stacks and $4 or something similiar).
  • Should it tie to chores?  Our kids are expected to do basic things like clean up their rooms, help make their beds, and such.   I’m not sure if, at this age, it makes sense to tie an allowance to this.   On one hand, you want to encourage them.  On the other hand, I don’t want money to be their sole motivation.
  • Assuming it did get tied to chores, would it be that you earned the allowance if you did chores or if you lost the allowance by not doing them?  It seems like a subtle difference, but it’s actually reward vs. punishment, which are very different.
  • Do you force saving or encourage it?  Our oldest loves Lego and he always has his eyes on certain sets.  He’s very good with math and numbers, so I would expect that he’d have no problem saving up, but I’m sure he would also be tempted along the way to buy smaller sets or other things.  And, our four year old is just starting to grasp savings.  Just wondering to what degree you encourage it, or do you let them learn it on their own?
  • What about giving?  Is it too young to introduce the concept of giving?  Do you make it mandatory?

Your Experience

As you can see, an allowance at our house would be something we would try to use as a learning tool and also to create opportunities for our kids to learn more about money.  We also want to strike a balance between respecting that it’s their money and that they can do what they please, but encouraging them to make good decisions with their money (or learn from the bad ones).

Readers, any thoughts from parents that have gone through or are going through this?  Please let me know your thoughts and advice.

11 thoughts on “Should We Consider Giving Our Kids An Allowance?”

  1. We’re pretty much in the same boat! Open to suggestions too 🙂

    Our 4 year old daughter just began getting an allowance (starting off with a $1/week). She can earn extra with bonus chores (mop. weeding our small garden)

    We’re not tying her money to essential chores (tidy her room/feed her cat). We expect her to do them regardless of allowance.

    We are encouraging to save and give. For giving we’ve been talking about gifts for her friends as a starting point. She gets material and then makes something for them. Trying to keep it simple right now.

    She has to save at least a quarter a week. Eventually we want to do something where she “earns interest” if she saves the money. Right now we’re just having her wait a few days to see if she still wants a toy.

    We’re open, so our plan is to review things time to time.

  2. Though I’m not a parent, this article really interested me.
    My Mum always gave me pocket money for doing chores – the bigger the task the more I received. I understand what you’re saying though, about how the cash shouldn’t be the only incentive to help around the house. It is however important to teach children about money!

    Many parents I know use a star chart – rewards for good behaviour then aren’t always monetary but can be gifts, activities or trips that the children enjoy.

    I’ll be interested to hear what you end up agreeing on.

  3. Yes! Definitely Moneybeagle. I started giving my kid allowance at the age of 6 years, but I had close monitoring on her expenses and I applied this envelope system so that shes’s always reminded what the money’s for. More importantly, I asked her experience and problems encountered on a daily basis to see whether she’s improving in terms of managing her allowance.

  4. it really does depend on the kids involved. explain that you need save with specific examples. when i was about four, the refrigerator broke, and my parents explained that they set money aside to get a new one. one of my friends parents had a similar break, and i could tell the parents were far more stressed out over the whole thing then my parents were. looking back on it, my friend’s parents most likely borrowed the money to repair the fridge. i learned the lesson even then, to save money so everyone wouldn’t be unhappy when something broke. I started saving money on my own, so i wouldn’t stress out my parents by asking for anything expensive. Not a lesson that can be duplicated on purpose, but it stuck with me. good luck to you with your kids!

  5. I’ve been thinking about this since we had LB. So far, if we give an allowance, it would not be tied to the basic chores of the household because as a member of the household everyone is expected to pitch in without being paid for it. But under that rule, I’m not sure what would justify giving kids an allowance other than for the purpose of teaching them how to handle money.

    That reason alone is good reason, of course, and if so, then I would insist on mandatory savings, and mandatory budgeted giving, as part of how the money is managed. Maybe I’d also tax the income so ze knows the difference between gross and net. 😉

  6. I think your kids are at an appropriate age for allowance…the $1 per year method is exactly what we did with our kids – and yes we tied it to chores. They have responsibilities they MUST do in order to earn their allowance. We don’t force savings…other than the discussion of if they want to buy something that is more expensive, then they have to not spend their entire allowance each week.

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