Dear Mr. Dad: I’d like to get my kids started on an allowance, but I’m in information overload. Is there a way to set up a meaningful and reasonable allowance system for my kids?
A: You’re right—there are few other issues with as many often-contradictory opinions, and since the topic of allowance touches on money and responsibility, it isn’t surprising that so many of those opinions are so fiercely held.
The best thing to do in setting up a family allowance policy is to take a moment to think about why you’re doing it. The answer is probably more complicated than you think.
In my view, the primary purpose of an allowance is to begin educating children in personal money management. If we keep our kids isolated from all the causes and effects of earning and saving and spending, we shouldn’t be surprised when they go to college and immediately start bouncing checks and maxing out their credit cards.
Another important reason to give children an allowance is to give them some practice making their own decisions—and suffering their own consequences. Resist the urge to protect your child from making foolish buying decisions. And he will, of course! Let him buy the ridiculously overpriced whatever that you know will end up under the bed by week’s end. When he goes to his piggybank next time and finds nothing but dust bunnies, he’ll have learned a crucial lesson about the consequences of his own choices. If instead you intervene every time he’s about to spend rashly, the lesson learned is that Mom and Dad are mean for saying no, or that Mom and Dad will always be there to bail him out if he gets in trouble. Wrong lessons.
Childhood, when the stakes are low, is the time to make judgment errors with money, and to learn from those errors.
The beginning of elementary school is a good age to begin a weekly allowance, but even before that age kids generally have money of their own, whether dollars from birthday cards or coins from the tooth fairy. Start with three containers marked Saving, Spending, and Giving. Whenever money comes into her hands, allow the child to make her own decision about how much money goes into each one (as long as something is allocated to each category). The amounts aren’t important; the self-guiding decisionmaking is.
Some parenting guides recommend one dollar per week per year of age. Like many “per year” guidelines, this one-size-fits-all concept is easy to remember but otherwise not particularly helpful. How many kindergartners really need six bucks a week? According to kidsmoney.org, the average allowance for a six-year old in 2007 was $3.85 a week, $5.52 for nine-year-olds, $9.58 for twelve-year-olds, and $15.50 for fifteen-year-olds. For high school seniors—get ready—the average allowance in 2007 was just over $40. (All together now: “Boy, when I was a kid…”)
It’s important to keep allowances separate from chores and behavior. Kids should have some non-negotiable responsibility for keeping the home and family up and running. If they fail at those, limit privileges instead of allowances, or you’re basically giving them permission to buy their way out of responsibilities. Not a good thing.
Lastly, it’s important to spell all these things out to your kids. Make it part of the whole picture of family rights and responsibilities. Children get some things simply because they are members of the family. These are rights. At the same time, they’re expected to do some things simply because they are members of the family. These are responsibilities. And then there are the things that are dependent on certain behaviors or actions. These are privileges. Issues like allowances tend to sort themselves out far better when parents make it clear what falls where—and why.