There are many opinions on allowances these days. Most American parents seem to be in favor of allowances for children. In fact, six in ten parents give their children an allowance. When you give your children an allowance and create guidelines for expectations, you can actually help create a more mindful child. An allowance can help a child gain self-esteem, learn about budgeting, and prepare them for the job market.
Tips for Estimating Allowances for Children
Determining the Right Amount
Sit down as a family and decide what is the age-appropriate amount for each child. This stays constant until you decide to review the allowance amount. This can be done at the beginning of each quarter or other regularly intervals (i.e. based on school year). Make sure you pay them in cash so they can see money, feel it and experience real money.
Each child should understand his/her responsibilities at home when receiving an allowance. Such responsibilities could include: keeping their rooms neat, washing the dishes, taking the dog out, or mowing the lawn. Be clear about the responsibilities associated with receiving an allowance. You may also want to decide how much each task is worth, like $1 for cleaning their room or $2 for walking the dog.
Keep Track of Their Duties
Kids should keep a log of the duties that they complete in order to receive their allowance. You can create an invoice for them to fill out. This will help them learn more about money management. First Kid Bank offers a way to keep track of your finances online or through your phone. Or you can create and print out a spreadsheet for your kids to fill out.
Agree on when the allowance is paid whether it is weekly, bi-weekly or whenever. This creates solid expectations for the child to know how long he/she has with this amount of money so he/she can make wise choices.
Teach Them Values
Teach your children to divide their allowances into three for saving, spending, and donating. Also, make them know how important is to never spend all their money because they need to balance these three areas in their lives. They will learn if they save $2 a week that adds to $104 a year. And by setting aside money for donations, children will learn about the importance of helping others at a young age.