Allowance is always a hot topic for parents. Do you give allowance? When do you start? Do you tie it to chores? Should you withhold allowance for any reason?
In general, I do believe in allowance, and I also believe in the approach of mandating that kids spend, save, and share, which has been widely reported as one approach. I think that the percentages should be decided by the child for the most part in order to teach financial responsibility at a young age, when the mistakes aren’t as costly.
I came across some great tips to get the conversation started and look forward to writing more about this important and relevant topic. The founder of ThreeJars, Anton Simunovic, had some great ideas:
1. Empower Your Child. Let them practice with real money. Truth is, when kids spend their own money and not ours, they get thoughtful – and fast.
2. Keep it Balanced. Allot a portion of every dollar your child earns to three jars: one for saving, the other two for spending and sharing. 50% to the save jar, 40% to the spend jar and 10% to the share jar is a good rule of thumb. This establishes healthy money patterns.
3. Be Consistent: Pay the right amount on time! Three dollars may seem trite to an adult, but to a young child, it’s their source of independent income. Give allowance the proper respect and attention it deserves.
4. How Much? Consider the age of your child, your expectations of what the allowance will be used for, and what your family budget can afford. Before high school, kids are often paid their age or half their age in dollars per week.
5. Should Allowance be Tied to Chores? Of the 13 million families in America that pay allowance, half believe allowance should be tied to chores. Consider telling kids that everybody in the family has to help out. If they don’t, losing TV, internet or cell phone privileges is much more effective. Practicing money is an important issue on its own to gum-up with chores.
Editor’s Note: Interesting statistic in terms of whether to tie to chores or not – I’ve always been torn, and it appears I’m in line with the stats! I’m very much in sync with Simunovic’s approach — my only difference is that I don’t like to mandate the percentages — I like to give the kids some control so they can start their money management skills early and feel empowered by their choices.
So, how do fellow moms approach this topic? Add a comment to this post to share your ideas!
Photo – Flickr.