A Complete Guide on Giving Kids an Allowance and Financial Responsibility
We all know that teaching our children about money is one of the most important things we can do. It’s something that needs to happen from a young age, and it can be difficult to figure out how to start this process.
One thing you might not have considered is giving your kids an allowance. Giving your child an allowance will allow them the opportunity to learn what it means to save, spend responsibly, and earn more money for their future education or purchase they want.
This blog post will give you some tips on how you can get started with giving your kids an allowance and teach them about financial responsibility as well!
1. What age do you give children an allowance?
The perfect age for a child to get an allowance is five or six years old. This way your little ones will be able to understand the different values of currency as they grow up and learn about how money works in today’s world, all while being engaged with their very first job!
2. How much allowance should a child get?
The old rule of thumb estimating 50 cents or a dollar for each year your child’s age is still an excellent guideline. You should also consider the financial situation of you family and what expenses their allowance will cover before deciding how much to give them though, because it can vary based on those factors.
Here’s an Example:
- If your child is 8 years old, then you would give an $8.00 allowance (based on $1.00 for each year of your child's age)
- If your child is 6 years old, then you would give an $3.00 allowance (based on $0.50 for each year of your child's age)
3. Set Rules for Allowance
The American Academy of Pediatrics understands the need for clear expectations from parents and children alike.
For example, if you are requiring your child to put 10% towards savings before receiving their allowance then make that expectation crystal-clear when giving them an initial amount or establishing rules in general so there is no confusion on either end.
A really great option to help pay your kids their allowance and learn saving money is the Greenlight – Debit Card For Kids
4. How often should I give Allowance?
Pick a payday and stick to it. A weekly schedule is often the most convenient, but there are others possibilities that you might want to consider as well like monthly or bi-monthly schedules; in fact, any number of paydays spaced at intervals will work so just go with whatever feels right for your budget!
5. Discipline and Allowance
One of the most well-known ways parents use allowances is as a form of discipline: either if your kids don’t do what you ask (like cleaning their room) then no allowance; but once again it doesn’t have to be this way.
Instead, Restrict computer or video gaming time rather than withholding a child’s allowance.
6. Tackling Chores & Allowance
The idea of paying the kids for chores may seem like a good way to motivate them, but it doesn’t always work. You could choose pay-for-performance as our society does, or you can instead encourage family teamwork with no direct compensation.
Other Methods to Teach Kids Financial Responsibility
1. Start a Family Fund
For families who are looking for ways to spend time together without spending a lot of money, consider allocating some funds that can be collaboratively spent with the family when it’s time. Holding familial meetings could also help you decide on vacation budgets or buying back-to-school supplies
2. Prepare for Outside Influence on Kids
Kids will want to make some larger purchases. Be willing and able to listen carefully when they tell you why, so that the purchase can be their choice rather than theirs being influenced by marketers or other people in your life.
3. Provide Other Opportunities to Earn Money
You don’t have to spend money on kids! They can earn their own if you pay for tasks. For example, they could rake the leaves or clean your grill or car. No need to buy them anything when they work hard enough by themselves!
Helpful Tips for Families
1. Encourage Philanthropy
Even the youngest children can start giving. Whether it is donating a toy, volunteering at an event, or helping someone in need on their walk home from school – they will be proud of themselves and learn how to give with kindness.
A habit starts early when kids are raised being given opportunities where they’re taught that good deeds bring joy not just for them but also others around them too!
Check out These Places to Volunteer:
2. Encourage Saving
Saving money is hard, but you can teach kids how to do it with the help of a piggy bank. Show them that saving small amounts will add up over time and give your children short-term goals for their savings account. Buy some smaller containers if they have trouble using an actual jar as one might get full quickly!
3. Say No To Allowance Advances
Allowances teach kids about trade-offs and rationing their money. Resist the temptation to provide a bailout; make them wait until next week if they spend it all! Just like adults, children need experience with financial planning–it’s never too early for that lesson.
4. Finding Outside Income
From the time they are young, children should learn that their family needs everyone to pitch in. They can do this by babysitting for neighbors and friends or offer snow shoveling services after a big storm.
Some families give their children a regular allowance while others keep all family funds to themselves. What strategy you choose really depends on the lifestyle of your family, but it is always important for parents to teach financial responsibility and savvy regardless of which option they decide upon in order that kids grow up knowing how money works.
What do you think about giving kids an allowance? Let us know by leaving us a comment below!
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