But most dads I know use the allowance system to teach their children the value of money. In the United States, about 60% of families give their children an allowance, according to recent research.
Making an allowance program work for your family can be easy if dads will follow a few simple guidelines and make it an opportunity for teaching your children about being responsible with money.
Why Have Allowances?
There are several important things children can learn from having and being responsible for an allowance.
The Value of Money. It is hard for children to put in perspective the relative worth of things. Having an allowance and the responsibility for its use helps them see these relationships. If they buy something at the store today with their precious allowance, then they are essentially saying that the impulse buy is more important than something else they might want later.
Responsibility for Money. Some fathers I know hate allowances when their children lose the money they have been given or when they "waste" it on something frivolous. But at least children learn that there are consequences for their actions, or their carelessness.
How and Why to Save. Saving for something important, or just saving for a rainy day, is an important concept for children to learn. Receiving an allowance and learning from parents how to save it will serve children all their lives.
Make Mistakes with Smaller Stakes. If children are helped to learn at 10 years old the importance of discipline with money, they can make mistakes with ten dollars now and learn rather than learning with a thousand dollars when they get their first credit card offer as a senior in high school.
Advice About Allowances
Many dads want to teach their children with an allowance, but aren't sure when, how much or how it should be handled. Here is some advice from other fathers and child raising experts about allowances.
When Should I Start? Most experts recommend that somewhere between ages 5 and 7, children are cognitively ready to handle an allowance. Obviously, you should start small with smaller children, but the principles they learn with small amounts will be helpful later with larger sums.
How Much Should I Pay? This is a very individual decision for a family. It kinds of depends on what will come out of the allowance. For example, some families have their children pay for their own clothing out of their allowance. If that is the case, you need to provide enough for them do have money for clothes shopping if they handle the allowance responsibly. You should also not pay more in allowance than you can afford to lose. Author Kerrilyn Bachler suggests that if you are not asking children to pay for needs but just wants, you should consider figures in the range of:
- Age 6-8: $2 weekly
- Ages 9-11: $4 weekly
- Ages 12-13: $5 weekly
- Ages 14-15: $7.50 weekly
- Ages 16-17: $10 weekly
The important thing is for them to have enough to make decisions with but not so much that they can make big mistakes.
Should I Require Savings or Contributions? I think requiring both savings and charitable contributions is a good idea. In our family, we built allowances around the concept of saving 20% of their allowances for college and giving 10% to charitable causes to help them learn the value of saving and sharing. Even when our children reached teenage years and had summer jobs, they continued these percentages and have had a nice little "nest egg" when they entered college.
Should I Tie Allowance to Chores? Fathers I know are all over the map on this question. In our family, we found a bit of a hybrid approach. We defined a basic set of chores for which our children were responsible and rotated them weekly. We taught them that those chores were just what was required as a member of our family. So the routine stuff like dishes, vacuuming, making beds and helping with dinner were totally unrelated to allowances. Our fear was that if every chore had a price tag, a child might decide one day that it wasn't worth $2 to mop the kitchen floor that week. And we wanted them to know that basic responsibilities are just part of family life.
But we did want them to have opportunities to earn extra money toward things they wanted. So the extraordinary chores like raking leaves, cleaning the garage, or washing windows were offered along with a cash amount for their completion. This seemed to strike a nice balance between basic responsibility and the opportunity for additional income.
Many dads I talked to offered some tips for making allowances work better.
Pay consistently weekly. The amounts are easier to manage on a weekly basis for both parents and children. And paying allowances regularly and consistently helped children learn the importance of keeping commitments.
Have a spending journal. Helping your children keep track of what they spend of their allowance and other funds gives them an opportunity to see where their money has gone when a day of reckoning comes and they don't have enough to get something they want. It is a good teaching tool.
Don't manage their spending. Part of what you want to have happen is for your children to make some mistakes when the risks are small. So don't micromanage what they do with their allowance. Help them follow basic rules, but then step aside and let them learn from their mistakes and enjoy the consequences of their choices.
Don't use allowance to correct behavior.Withholding allowance for bad behavior in other areas or for bad grades sends the wrong message. Use good discipline tools for poor behavior; keeping the allowance out of that equation will help you focus on learning the value of money.
Make savings visible. Get a glass quart jar for the children's savings and put it in a visible place so they can see the amount grow. When the jar is full, take it to the bank and put it in a savings account. As your children see their savings grow, they will feel proud of themselves and their discipline.
As you work with your children to teach them the value of money and how money is responsibly used, you will find allowances among the best tools I know for giving them these skills. Keeping it simple, consistent and fair will make the allowance experience a good one for dads and children.
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