Do kids still get allowances?
Sometimes I wonder when I see kids successfully lobbying their parents to buy them cool toys and everything else they ask for. Or when kids so easily pour money — your money, that is — into music downloads and games without paying you back after the bill arrives.
Are parents caving to their kids’ spending demands? Do parents even take the time to think about the future consequences?
Based on some surveys over the last 10 years that I came across, the practice of giving kids an allowance does seem to be on the decline, especially among kids ages 12 to 19.
That’s a missed learning opportunity because an allowance is one of the pillars of teaching kids to handle money responsibly. I’ve always been a big believer in letting kids use their own money to learn about spending, saving for both immediate and long-term purchases, investing and giving to charity.
If you’re thinking of paying an allowance for the first time, or if paying an allowance has fallen out of favor in your house, here are some steps to help you get the most bang for your allowance buck.
▪ Start early. Experts say kids can start on an allowance around ages 4 or 5. That’s when kids begin to understand how money works and how money can buy stuff. It’s also when kids are learning in school how to count and how to identify coins.
▪ Have a goal in mind. Before you start handing out money, there should be a family discussion. Is the purpose of the allowance to teach money management, period, with no strings attached? Are there expectations that chores will be required in order to be paid? And if chores aren’t required, is there an understanding that the kids will pitch in and help around the house?
Many parents tie the allowance to completing chores. I know parents who have created a grid on a whiteboard in the kitchen, which they fill in with their kids’ names and their chore rotations.
I’ve seen it work, but it can get confusing, especially if kids swap jobs and don’t keep you in the loop, or big brother pays little brother to empty the trash for a week.
I’m in the keep-it-simple camp. An allowance is strictly a money-management tool, with no chores required, but with the caveat that the kids will help out around the house when something needs attention.
▪ Be consistent. Pay regularly and on time.
▪ Let your kids make mistakes. Don’t rescue your youngster or grant him or her an advance if the money is gone before the next payday. Likewise, don’t stop what you think is a foolish purchase. It may be hard to hold your tongue, but remember that kids learn best from their own mistakes. Consider it a lesson in buyer’s remorse.
How much should you hand out?
There’s no right answer. It depends on your child’s age and expenses, your financial means and your attitudes about money.
I started with $1 a week when my kids were in first grade, then ramped up $1 dollar per year through elementary school. Middle school and high school brought cost-of-living increases based on a growing number of expenses, like movie tickets and gasoline.
Whatever your approach, I recommend that as your kids get older, give them more money to manage. And then give them room and let them learn.
Steve Rosen: 816-234-4879