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Is an Allowance a good idea?
Most discussions for parents regarding teens and their allowances
revolve around what it should be for, what it imparts and teaches
children about money management, fiscal responsibility, spending and
debt, when to start and how much to give.
Thinking beyond the allowance being a good idea or not, once your child reaches his teenage years leads parents down the path of considering a possible quarterly clothing allowance in addition to the weekly allowance. If you do choose this option , it's is a good idea to consult with your teen in setting up a budget and allowing for some discretionary spending and letting your child spend the allowance as he or she wishes. If your child chooses to buy a $95 shirt, for example, he or she may have to learn how to make compromises on other clothing choices. A good premise to bear in mind, if you give a child money, is that it must come with explanation and instruction. Capitalize on the teachable moment. All children, even very young children, have a sense of value. At least an intrinsic value that they can exchange money for goods in the marketplace. This human currency does not stay foreign to them for very long and bartoring and trade negotiations skills they will continue to master – especially with parents on trips to the mall, at Christmas Time or for birthday purchases! It is also true that even young children can feel a sense of deprivation from the lack of money or withheld allowances as punishment for bad behaviour, again learning about cost and consequence. At a young age, money should be used as a teaching tool. You can teach a young child to count with money. You can teach the concept of tolls, taxes, and tipping. Taking a child to a bank and opening savings accounts can create an excuse for a great family outing. Delayed gratification can be taught by having the child save a portion of each allowance for the purchase of a desired toy in the future. As for the amount, many experts agree that $1 per year of age per week is appropriate. I believe that a 4-year-old can get by on less. I would start out with $2 -- a one dollar bill and change. Let the child feel the difference and slowly introduce them to the concept of relative amounts. If $1 per year of age per week sounds like a great deal, have them use the money for the future. For example, have them give some of the money to charity. Have them give some of the money to the family cause, and force them to put some of it into the bank. The bottom line is not to simply give your child an allowance regardless of how much you decide is appropriate. Use this money to teach positive money habits and lessons. An allowance gives your child experience managing money, setting spending priorities and budgeting for expensive items. Your son/daughter needs to have reached an age for money to be meaningful. That is, children should be aware that items in stores need to be purchased and that money is needed to buy them. They should be able to recognize different coins and know coin values and should have basic counting skills. These skills usually are emerging by ages 5 to 6. |
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