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Money Matters: Allowance Tips for Kids and Teens

While shopping recently, a teen celebrity magazine caught my daughter’s eye. I was prepared for the begging to kick in, which would quickly be followed by the pouting when I refused to purchase the magazine for her. But I was pleasantly surprised when she didn’t even ask me to pay for the magazine. She quietly put it back on the shelf and followed me when I told her it was time to move on with our shopping. 

I asked her about it later. She said she wanted the magazine, but she knew I would refuse to pay for it and suggest that she use her allowance instead to pay for it. She didn’t want to spend her own money on the magazine since “it would just get torn or wet and end up in the recycling bin.” It was one of those proud parenting moments when you realize that your child really is absorbing what you’re trying to teach them.

For our family, giving my daughter a weekly allowance has been a great move. There are several different ways to go about it. What works for one family won’t necessarily be effective for another. While there isn’t a one-size-fits-all solution for giving your child an allowance, there are several factors to consider before handing out money.

How old is your child and what is their maturity level?

These factors will help steer your decisions as you determine the allowance system. You don’t want to make it so easy that your child takes getting an allowance for granted, but you also want to set realistic expectations based on their age and maturity level. Visit your library or bookstore for books to read with your child to help explain money management and the concept of receiving an allowance.

My daughter is 11 and has been receiving an allowance for a few years. At first, she struggled with the concept. She expected me and my husband to buy her whatever she wanted and still get to keep her allowance! Now she just needs an occasional reminder of how it works.

What purpose do you want the allowance to serve?

Is it to teach the value of money, be an incentive for chores, or give your child some cash in their pocket? There is no right or wrong reason here but having a clear concept of why you are handing it out will help you plan the other factors. You should also explain to your child why they are getting an allowance and what you hope it will help them achieve.

I see allowance as both a teaching tool and convenient. In young adulthood, I made a lot of financial mistakes because I didn’t know how to handle money and I want to help my daughter avoid the mistakes I made. The other main benefit of her allowance is that she has her own money and isn’t constantly begging us to buy her stuff.

Will the allowance be contingent on anything?

Some children need to complete all of their chores, meet behavior goals, earn set grades on their report card, or meet other criteria in order to receive their allowance. In other families, the child receives the allowance no matter what. Another option is to blend the two methods. In this scenario, the child receives a small base allowance, but has a list of ‘extra’ chores they can choose to do for additional funds.

Our daughter receives a flat rate each week; it is not contingent on chores. Me and my husband feel she should help out around the house because she’s part of the family and not because she’s paid to do so. Plus, keeping up with how much she earns and if she completes the chores is more work than I want to add to my plate. However, she’s responsible for cleaning her room and bathroom each week. If she doesn’t do it, she has to pay me her allowance for the inconvenience of having to nag her about it and she isn’t allowed to participate in fun extras until her chores are done.

How will the money be administered?

Options include:

• Handing out cash every Friday, for example

• Paying in a lump sum monthly

• Putting the money directly into your child’s savings account

• Adding the funds to a prepaid debit card

• Holding on to the money and keeping track of  your child’s credits and debits for them

My daughter’s allowance is automatically transferred from our chequing account to her savings account every Friday. I’m happy to front her money if she wants to buy something, provided she has enough in her bank account, and deduct the amount online later.

Will there be restrictions on how your child spends the money?

If your family has specific rules, such as forbidding toy guns or candy, make sure your child knows that the rules still apply even if they have their own money. Some parents require their child to devote certain percentages of the allowance to charity or savings. Others give their child free reign on how the allowance is spent.

Our daughter’s allowance is hers to spend as she wishes. I might help her get the wheels turning by saying something like, “That big stuffed snake costs $24 plus tax. Is it worth six weeks of allowance?”

What things will they be expected to pay for out of their allowance?

Will your child be expected to use their allowance for lunches, clothing, school supplies? A popular option is to give older children and teens a budget and allow them to keep any excess funds. For example, they may receive an allowance of $20 a week, which includes their lunch money. However, they can choose to brown bag it to school and use the money in other ways. On the other hand, you might prefer to purchase all of your child’s necessities and give them a small allowance to cover their ‘wants.’

We pay for all of our daughter’s basic living and school expenses. We expect her to purchase toys, tokens, and trinkets out of her allowance.

How much should you give?

Once you determine if your child will have to pay for items out of their allowance or not, you can determine how much to offer. There are many different formulas used for this, such as a dollar a week per the child’s grade. This formula can be a good starting point, but only you can determine the right amount for your child based on all of the mentioned considerations.

Our daughter receives $5 a week, which I think is very generous since she isn’t expected to pay for any necessities out of it. It goes quickly, though. She can spend her whole week’s allowance in minutes at an arcade or on an ice cream sundae with her friends.

It’s important to allow your child some freedom in their spending, so they learn firsthand the value of money. I don’t always agree with how my daughter spends her money, but it’s hers to spend. That giant stuffed snake has had a spot on her bed for over a year now. She’s learning to splurge on the items that make her happy and skip the ones she can do without.

Rachael is a mother, freelance writer, educator, and family advocate. She spends her own allowance on shoes. Find her at http://rachaelmoshman.com.

 

 

 

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