What Age to Give Your Kids an Allowance
If you’ve decided that you would like to give your kids an allowance but you’re not sure when to get started, this article will help to answer some of your questions. To many parents’ surprise, research has fond that kids start to grasp financial concepts at age three and by age seven, they have started to form many of their money habits. So when it comes to teaching financial lessons, it is almost never too early to get started.
Why kids should get an allowance
There is a debate between financial experts and parents as to whether or not children should earn money for doing chores. On the pro allowance side, it is argued that allowance is a good way to teach kids about money management and other valuable financial habits. Tying allowance to chores teaches kids that they have to work to earn money. Giving an allowance allows them to make financial decisions and set financial goals.
Those that don’t feel kids should get an allowance argue that children should not be paid to participate in the family chores. As part of the family and members of the household, they should be expected to participate. Both sides of the debate have valid points and it really comes down to your own personal thoughts on the subject matter.
Fixed allowance vs chore based allowance
There are different types of allowance systems of allowance you can use. The fixed allowance system provides a fixed amount of money to the child every week or every month. They know exactly how much they are going to get on a fixed schedule.
The other method is called the chore-based system. You determine an amount of money that is tied to a specific chore. When a child completes a chore, they are given the predetermined sum of money.
Parents who don’t agree with paying their child for doing household chores might prefer the fixed-allowance method as it is not tied to individual chores.
When to start giving your kids allowance
You should start giving your kids an allowance when they can understand the basic concept of money and what it is used for (to buy things). This usually occurs between ages four and six. But, every child is different so you will need to be the judge of when your child is ready.
If you feel that your child still lacks the financial skills and understanding to fully grasp an allowance, you can introduce a star-based or sticker-based system. This is when you create a type of activity chart and if your child is kind, helps to put away their toys, or eats all of their dinners, they earn a sticker. When they have a certain amount of stickers in a row, you reward them with a special trip or their favorite treat.
This is one way you can start to introduce the concept of a rewards-based system without including money.
Signs your kid is ready to start receiving an allowance
There are a few signs you can look for to signal that your child might be ready for an allowance, these include:
If your child is constantly asking questions about why you work, how you buy things, or what money is used for, you can take this as a signal that they may be ready to start receiving an allowance.
They are interested in helping you at the store
If you bring your child to the store with you and they express an interest in helping you pay for things or they continuously ask you questions about how much things cost, this can be another sign that they might be ready for an allowance.
They make-believe with money
If your child is playing games of store or bank where they are exchanging pretend money for a product, this is another sign that they are beginning to understand the concept of money and how it works.
They keep asking for money to buy things
If your child continuously asks you for money to buy something, this may be another sign they are ready for allowance. They are clearly connecting the dots between money and the ability to purchase a good or service. So, instead of giving them your money when they ask, you can consider giving them an allowance and encouraging them to save up their pocket money if they want to buy a new toy or treat.
Mistakes parents make when giving kids an allowance
As parents, we all money mistakes, it’s just a normal part of the job. However, we can help each other out by sharing our experiences and our past mistakes so others can avoid repeating them. Here are a few money mistakes that you can try to avoid when giving your kids an allowance.
Children like consistency. If you are going to implement an allowance or rewards program, stick to it. Establish the rules at the beginning and don’t waver.
Starting too late
Kids are smart and as parents, we often delay in trying things because we don’t think our kids are ready. As soon as your kids start to give you signs that they are interested in money, consider giving them an allowance.
Not setting allowance parameters
When you give your kids an allowance, this is an opportunity for you to teach them about financial responsibility. So, instead of just giving them a sum of money and letting them do whatever they want with it, set some parameters. For instance, providing guidance or rules on how much of their allowance should be how much money should they set aside for savings. If you just allow them to spend every dollar they have on toys or candy, they aren’t learning anything.
Giving too much money
Giving your kids a weekly allowance is an excellent opportunity to teach them skills like delayed gratification. When they have to save up weeks of their money in order to buy that special toy, it teaches them patience. If you give your kids too much money, they won’t necessarily learn this important lesson.
Setting a bad example
“Do as I say, not as I do,” is not an effective parenting method. Our children see everything we do and they often model our behavior. So, if we want to use allowance as a way to teach them important money lessons, we have to practice what we preach. If you continuously charge things on your credit card and are constantly in credit card debt, you are modeling the wrong behaviors.
If you make a mistake in the process of giving your kids an allowance, don’t worry about it. Use this as a teachable moment and demonstrate to your child how you learn from your mistakes.
— By Jessica Martel