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When Should Parents Start Giving Their Kids Allowances?
By JLP | March 14, 2006
Single Mom asked me the following question:
giving their children an allowance?
I think it is up to the parents, but I would start at around age 5 or so. I suppose you could start at three so that they kind of get the feeling of what is going on. However, I doubt that a three-year old is going to really understand what is happening with their money.
A five-year old will most likely be able to understand that something they want at the grocery store is going to cost money. So, it might be neat for them to be able to get some money out of their piggy bank to take to the store with them to buy a pack of gum or candy or something like that.
An Introduction to Goal-Setting
To get kids hip to the idea of setting goals, it might be fun to flip through a catalog with them and pick out some toy or something that they want that they can save for. Help them cut out the picture and put it in a place where they can see it. Then, when it is time to go to the grocery store and they want to get some money for candy, you can show them the picture of their goal and tell them that if they spend their money now, it will take them longer to reach their goal. It might make a difference and it might not. Of course it is your call whether or not you let them spend their money.
It is a learning experience for both parents and kids. I wish my kids weren’t so spontaneous with their spending. For instance, we will go to a store to get a particular item and they will see something else they just have to have and they will forget the reason they went to the store in the first place. In most cases I let them spend their money the way they want because I figure they won’t learn anything if they don’t have control over the situation.
Anyway, those are my thoughts on kids and allowances.
Topics: Kids and Money | 7 Comments »
March 14th, 2006 at 6:38 pm
I think people can start pretty young if they are directing their children and using it as a learning tool, not a handout.
From what I’ve noticed, parents tend to give allowances but don’t offer any guidance regarding saving or budgeting. They just give the money and that’s it.
You’re right though, it is a learning experience for both.
March 14th, 2006 at 7:10 pm
My wife and I are going to start with our 17 month old soon, 50 cents right now increasing 50 cents for each birthday. It will just go into his piggy bank for a few years. Then as the piggy bank fills up we deposit it into our checking account to be transfered to his savings account. Hopefully by 5 years old he will have $500 – $1000 in savings his allowance plus any $$ given as gifts to him. He will then be able to see some interest on his savings and hopefully want to grow his savings.
March 14th, 2006 at 8:48 pm
Thanks for answering my question. I see how it can be a learning experience for both the parent and the child. I started giving my daughter an allowance when she was 8. I’ve tried just about everything you’ve mentioned but I’m still not sure if I’m really teaching her anything. I don’t attach allowance to chores because she’s responsible for those anyway. She gets $5 every two weeks with the potential of earning more by going above and beyond my expectations. She’s a pretty good kid, so she usually earns about $10 every two weeks with bonuses for good grades and responsible behavior. She saves about 20% without any persuasion; however, she will not SPEND any of it. I try to make her spend money but she refuses (lol). Crazy huh?
When she asks for something, if I say you have to spend your own money, she doesn’t want it anymore. On one hand, that lets me know she didn’t want the item that bad, but on the other hand, I wonder if it’s my fault that she hoards money. Other than teaching her about compounding interest with her savings acct, I don’t know how else to teach her about money if she won’t spend it.
This past week, she did the sweetest thing though. Her best friend had a birthday and she took ALL of her money and just gave it to her. While giving is something I teach her as well, I don’t think she even cared how much she was giving away.
This has been a mind boggling experience, but I’m learning as I go.
March 14th, 2006 at 10:23 pm
We do it with our three year old (as well as our six and eight year olds) and he ‘gets it’ surprisingly well. He’s learning to save, and also learning patience. It’s working pretty well, although he does have brothers to learn from.
March 15th, 2006 at 3:07 am
I think they should start giving you an allowance at 20 right through until 35.
D (seeing as though that would help me out).
Singlemom, I think it is great that your kid is saving up already! Don’t worry about her saving up ALL her I am sure she will soon learn to part with some of it when she gets to the age of wanting the latest stylish clothes etc.
sounds like you are doing a great job!
March 17th, 2006 at 12:52 am
[...] Here’s a good discussion on when to start giving your children an allowance. (All Things Financial) [...]
March 17th, 2006 at 5:46 am
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