Children and Allowances

Children and Allowances

Sooner or later, the topic of allowances arises in most families.

Before handing over a weekly allowance, there are many questions that each family must answer. For example, when is my child old enough to begin receiving an allowance? What are the conditions--should he or she earn the allowance or should it be automatically given? What should he or she be expected to pay for? How much should he or she receive?

How Old?

Experts estimate that approximately 60 percent of American parents give their children some kind of allowance. The average age seems to be about six, although a child’s readiness may vary. Most first graders have been exposed to some basic rules of commerce and know, for example, that a quarter will buy more candy than a penny. Elizabeth Lewin, co-author of Simple Ways to Help Your Kids Become Dollar-Smart (Walker & Co., 1995), suggests: "By the time they’re five or six, most kids have a concept of numbers and of counting." Once they have mastered these skills, most children are developmentally ready to learn the basics of saving and spending.

In Exchange for Chores or Not?

Should young children be paid for doing family chores or should those chores be expected, as part of each member’s contribution to help the family function?

Ellen Gallinsky writes in The Preschool Years: Family Strategies That Work (Times Books, 1988), "Some parents hold that, as family members, children have certain rights (getting an allowance) coupled with certain responsibilities (their jobs within the household). Others sever the allowance from work--children receive allowances simply for living, and jobs must be done because family life depends on their getting done. When children fail in their obligations, they still receive their allowance, but there are other consequences (e.g., "You can’t go out, until you’ve done your job.")

Lewin agrees. "A family is a community. I don’t get paid for emptying the dishwasher. Why should a child get paid for doing his share around the house?"

Gallinsky cautions that parents must make very clear what they consider children’s regular responsibilities (cleaning up their toys, taking dishes to the sink) from special chores that parents are willing to pay children extra to perform (raking leaves or washing windows, for example). Otherwise, children will be demanding money every time they pick up a sock!

What Should Kids Pay For?

Many experts believe that the best way for a child to learn to manage money is to give her her own money and allow her to make her own choices about spending it.

Some families expect children to pay for their weekly church donation or scout dues. Others require children to save something, to pay for gifts for family members, or even to pay for school lunches. In most cases, children are allowed some discretionary income to spend on snacks, baseball cards, toys or unessential clothing.

Experts advise parents to let children make some mistakes--for example, spending a week’s worth of allowance on candy, leaving nothing for an unexpected expense later in the week. Irene Leech, Ph.D, professor of consumer education at Virginia Tech, says, "Kids need to learn early on that they have [a certain amount of] money and that they’re responsible for making good decisions." But be certain that the child’s allowance really does cover the expenses he’s responsible for.

How Much?

One common guideline is to give a dollar for each year of the child’s age (for example, $7.00 for a 7-year-old). But some parents think that this amount is too high.

North Shore residents tend to give more modest allowances. Typical amounts range from $1.00 to $3.00 per week for five to seven-year-olds and $3.00 to $7.00 per week for eight to ten-year-olds.

Most local parents give children a basic allowance, but then provide opportunities for extra money-making chores. "My children are given allowances for completing their responsibilities--making beds, picking up their toys, etc., which they do because it’s expected,"says a mother of two. "Extra money can be earned for extra things, like watering the plants."

A mother of six and eight-year-olds says, "I began providing allowances when my kids asked for it and showed an interest in buying their own ’stuff.’"

What about raising allowances? One family routinely raises the children’s allowance on each birthday, even if just by a nominal amount. As a child takes on more expenses, his allowance needs to grow accordingly.

Regardless of how your family decides to handle it, there’s no doubt that allowances help children learn valuable lessons about handling, spending and saving money.