Why You Should
Give Your Kids An
Allowance
Allowances: Yes or No?
Parents have always had questions about
whether or not to give their child an allow-
ance. At what age? How much? Should an
allowance be tied to chores or shouldn’t
a child be expected to do chores, without
payment, as a member of the family? What
about the save, spend, and give approach to
$
the money they’re given? Lastly, how does
an allowance serve as a way to educate a
$
child about financial choices in their future?
We thought about running the three ar-
ticles found here as a series in three con-
secutive issues of WNY Family, but after a
lot of thought, felt that including them in
one “package” was the best way to pres-
ent a comprehensive look at the subject and
$
provide more than a few “pennies for your
thoughts” on the subject of kids and allow-
M
ost parents give their
kids a regular allow-
ance; some a few dollars
a week, others substantially more. But
is that advisable and, if it is, at what age
should you start giving it to them and
how much should you give?
Experts agree that an allowance can
teach kids important money manage-
ment skills, like how to save for things
they want, how to budget their money,
and how to choose between competing
spending goals. Brad Munson, a person-
al finance expert, says an allowance “is
a great way to teach kids about the real
value of money, how to be organized
and responsible, and how to plan for the
future.” Financial counselor Ray Mar-
tin, who is the author of several books
on money management, adds that an al-
lowance is a great opportunity for kids
to experiment with money and to learn
from their mistakes. “It’s a way for them
to learn big lessons with small amounts
of money at an early age.”
It’s important that you talk to your
kids about the value of money, and it’s
best to do so in the context of an actual
14 WNY Family September 2018
— by Tanni Haas
ances!
allowance. Marty Allenbaugh, a certi-
fied financial planner, says that talking
to your kids about money without giv-
ing them an allowance is like trying to
teach them how to play the piano with-
out ever letting them sit at the keys. are ready to benefit from an allowance
once they have reached certain develop-
mental milestones, like 1) understand-
ing that money can be exchanged for
things they want, and 2) they can confi-
dently add and subtract.
Research shows that giving kids a
regular allowance while discussing with
them the importance of money makes
them more financially responsible as
adults. They become, as Evonne Lack, a
personal finance expert, succinctly puts
it, “less likely to arrive on your doorstep
years from now with a duffel bag full of
dirty laundry and a mountain of credit
card debt.” And, here, kids differ widely. While
some kids reach these milestones at age
4 or 5, others get there by age 8 or 9. “So
if your child tends to shrug at money,
losing it before it can find its way to his
dusty piggy bank, hold off until you see
signs that he enjoys saving it or thinking
about how he might use it,” says Mrs.
Lack.
When To Start
If an allowance is such a great tool
for teaching kids money management,
at what age should you start giving them
one? Many parents start at age 8, but ex-
perts agree, as Mr. Martin puts it, that
it’s the kid’s “aptitude not the age that
really matters.”
So how do you know if your kids
are ready to receive and learn from an
allowance? Research shows that they
How Much Allowance?
Finally, but not least importantly,
what amount should you give your kids?
Experts agree that, as a rule of thumb,
you should give them $1 per year of
age on a weekly basis: for example, a
six-year-old would receive $6 a week
and a ten-year-old $10 a week. The
advantage of this approach is that kids
get an automatic raise every birthday,
eliminating the question of when their
allowances will be increased. If you are