Money is a somewhat sensitive topic, and not one I will generally address around here. You bring up money or politics, and the claws come out! Everyone has a different opinion, and that is totally fine. Today, I am sharing what we do about allowance for our kids. Feel free to ignore me if you don’t agree. Also, this post is a bit wordy… sorry about that, there is a lot of information to share.
What is allowance?
There are several schools of thought on how to give allowance to your kids, or even whether to do it at all. One way is to give no allowance at all. One is to give an allowance based on completing chores. And one is to give an allowance with no strings attached.
With the first, you will need to provide for your kids’ needs and give them money or buy them things when they need them. With the second, you will need to figure out how much money your kids will earn for each chore, and create a system to check that the chores were completed before adding up their allowance for the week. With the third, you just set a certain amount of money that your children will receive each week no matter what.
What We Do
We fall into the third category. We give our children an allowance whether or not they do any chores. We are using allowance as a tool to teach them about money. We do require the kids to do chores because they need to contribute to the well-being of our family. I do chores. My husband does chores. The kids do chores, and none of us gets paid to do them. However, as the kids get older and want to earn more money than we give them for allowance, they are free to take on extra jobs like mowing the lawn or washing the cars or babysitting to earn more.
We feel it is important for our children to learn the value of a dollar early on. They learn to save up for things that are more expensive, and they learn how much things cost. They are learning not to waste their money on things they don’t need. Recently, we were at the Dollar Spot at Target, and my oldest told my youngest not to buy a toy that would break in an afternoon, so she thought about it and bought candy instead. :)
So far, we don’t provide “credit” to the kids if they forgot their money, and they can’t take out loans from us if they do not have enough. But as they get older, we might provide these options to teach them about interest charges and repayment plans. We also try not to micromanage what they buy. If they really want it, and they have the money for it, they can have it. Sometimes, we give advice, but we won’t interfere if they really want something. When I was little, I would ask for things from my parents; my dad’s response always was “You got money? Buy it.” That is the same response I now give to my girls. This makes our lives a little easier when we are out shopping. We do not need to have arguments about whether I will buy something, and my children do not beg for things every time we are at a store.
We started giving allowance to the girls at age 5. At that age, we felt that they understood what actual money was, and they could add and subtract enough to count their money. We gave them $3 a week. One dollar for saving. One dollar for giving. And one dollar for spending. Every year or two, their allowance goes up by a dollar. My youngest is now receiving $4 a week, and my oldest receives $7 a week. They still save one dollar, give one dollar, and spend the rest.
The girls put their money into three different jars in their rooms. One for each category. When the save jar gets full, we take it over to the bank and deposit it into their savings account. They handle the spend jar on their own: choosing to save up for something or spending every dollar they get. As for the give jar, they decide where they want to donate that money. Sometimes they give at church, sometimes at a charity, and sometimes for people they see that need help.
That was a lot of information to throw out there! Remember, this is just how we have decided to handle allowance as a family. This works for us, but it might not work for you. As always, take what you think will work, and leave the rest. Being organized even in financial matters is supposed to make your life easier, not harder.