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An allowance is a tried-and-true method for teaching children about managing money. Parents approach this differently, particularly in how much to give. It's important to keep in mind the factors that influence how you set up an allowance for your child.
Cheapism provides a helpful checklist of things to consider when choosing an appropriate allowance amount. One of the key factors is age:
A survey by BabyCenter found that the most common age to begin giving an allowance is 4. At this age, children may start to show an interest in saving money in a piggy bank and watching it grow until they have enough to buy something. However, if they don't fully grasp the idea of saving for a specific item, they might not be ready. For some kids, 9 or 10 may be a better starting point.
As your child becomes more familiar with the concept of money, you might think about increasing their allowance. Cheapism suggests adding fifty cents each year as your child grows older.
Another key consideration? How your child plans to spend their allowance:
If the allowance is meant for non-essentials like toys or video games, then a smaller amount will usually suffice. However, as they get older and you expect them to use their allowance for necessities such as new
school clothes
or supplies, it may be more fitting to increase the amount. Be sure to consider what additional financial support you’ll provide and adjust the allowance accordingly.
Naturally, you'll also need to factor in your own financial situation when determining the allowance. Ensure you're budgeting appropriately for it. For more advice, you can read their full post.
Photo by Steven Depolo.
