The Pros And Cons Of Giving An Allowance

• An allowance can teach kids about finances, responsibility and the consequences of poor financial decisions. In 2017, Champlain College’s Center for Financial Literacy graded all 50 states on their attempt to produce financially literate high school graduates. Only five states received an “A” rating. Therefore, anything you can do to enhance your child’s financial knowledge is a win.
• If the allowance is tied to chores, kids learn the relationship between work and pay. Helping your child understand the correlation between work and reward will set them up for their future careers.
• It gives kids spending money for non-essential items such as toys and video games. This way, they don’t always have to ask you for money when they want something.
• Using an allowance as an incentive motivates kids to get their chores done.
• If you use an allowance to reward your kids for good grades, it could help them get into a better college or even receive scholarships.
• If you require donating as part of your allowance system, this can teach your kids the importance of giving to those who are less fortunate.

• An allowance may undermine the importance of contributing to the family. Your kids may get the perception that duties always deserve a reward instead of simply doing their share for the family.
• Paying kids for doing chores teaches them that working for money isn’t always fun.
• Kids may not be motivated to do their chores when they don’t need the money or they have saved up enough.
• It may be challenging to give an allowance if you are on a small budget but have a large family.
• An allowance may open the door to kids making poor financial decisions when spending their money.

The child-development experts behind Sesame Street have determined that children as young as 3 years old understand the difference between wants and needs. Therefore, this may be a prime time to start giving your children an allowance.

If you feel as though this is too soon to start giving your children an allowance, you may consider starting once they begin to lose teeth. The monetary reward for losing teeth may be a good intro into a new reward system.

Every child learns at a different rate. Determine what you’re comfortable with. Remember: There is no right answer.

Another philosophy is to give the child half of their age. This allows the parents and children to ease into the process of giving and receiving an allowance every week.

You could also to base your child’s allowance off the complexity of the task or chore they complete. Each chore could have a different value. Simple chores would pay out less money, while more difficult chores would pay out more money.

Other parents choose to base their allowance on their child’s grades. It’s important to be clear about the requirements and what grade deserves a monetary reward. An example would be to reward your kid for every “A” they receive on a test or every “A” they receive on their report card.

In the end, it’s fairly simple. If the child meets the predetermined requirements, they receive the agreed upon allowance. If they fail to meet the predetermined requirements, they don’t get the money. Your decision depends solely on how much the parents are willing to give or is financially feasible.

Once your child gets the hang of depositing their money and watching it grow in a jar, you may want to consider using additional jars for spending and donating. Then your children can put a designated amount in each jar. This process gives them the responsibility to manage their own money and save for items they desire. It also teaches them the value of savings.

You could also decide to use an app to manage your child’s allowance such as BusyKid or iAllowance. These apps modernize and automate the process. Some allowance apps will give your child the opportunity to spend, save and donate to their favorite charity. This is a similar concept to using the jars.