3 Ways To Set Up Your Kid’s Allowance
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Different strokes for different folks, as they say. The same is true for handling teenagers and how to give them their allowance.
Some parents may find it easier to give them a monthly allowance, but some may find that their teen ends up spending it all before the week is through.
Here are three strategies for giving your teens their allowance, along with pros and cons:
The Monthly Allowance
Pros: This approach is easier on your part, because handing over the cash is just a once-a-month event, and may simply take a monthly trip to the bank or the money transfer facility if you're sending money to your kids in college.
Cons: Since some teens tend to lack self-control, you may be in for a lesson learned the hard way: some of you may have discovered that your teens could spend a whole month's allowance in a day.
For teens who haven't outgrown their spendthrift ways yet, it may not be a good idea to give them a monthly allowance.
For these kids, you may want to teach them why they need a budget.
The Weekly Allowance
Pros: A weekly allowance may work a bit better for your child. With money for your child divvied up each week, you may find this system to be more comfortable, possibly causing you less anxiety.
Cons: There's still some risk here of your child spending their weekly allowance in a short period of time. Also, having to sit down with the kids to hand over their money each and every week is a little tedious and inconvenient.
You may want to hand them a prepaid reloadable debit card as a way to dispense their allowance.
The Daily Allowance
Pros: For kids who can't handle even a week's allowance, this is best. You won't wreck your budget even as your kid wrecks his (for the day). There's a limit to how much your child spends per day.
Cons: As we've mentioned, giving out an allowance on a weekly basis may already be a pain, so an allowance doled out every single day is even more tedious.
Also, this method won't teach your kids the skill of managing their budget: without the experience of holding on to money for longer periods of time, your child won't have the opportunity to make mistakes with their money, and thus, won't have the chance to learn from those mistakes and experiences.
Which Allowance System is Right for Your Kid?
It certainly takes a lot of patience to raise kids and to teach them the value of money. But you are there to help them grow and become better people.
For those who are fortunate to have responsible kids who know how to make their money last until the end of the month, then good for you!
Maybe you'll even be able to trust them to handle college student credit cards without the fear that they'll get into trouble with too much debt. Children can be taught to understand that these credit cards are for use only for emergencies.
As for those whose kids need a lot more help with learning how to manage their impulses in a consumer-driven world that goads children and adults alike to “buy, buy, buy,” it may be wiser to let your kids handle a weekly allowance: such a schedule may teach them how to work within their budget.
Plus, you won't risk the possibility that they end up blowing their whole month's allowance in a short period of time.
When your child runs out of money in the middle of the week, use tough love and don't let him or her talk you into having you give them an advance.
Let them learn the hard way by leaving them to deal with their finances (as best as you can). Sometimes, it takes firm discipline for a kid to learn.
These were some of the options (and schedules) you can take when dealing with your child's allowance. So what kind of system do you think will work best for your child?
This guest post is from The Digerati Life, a personal finance blog based in the Silicon Valley.
Photo by Nicole Francoise
I got my allowance weekly when I was a kid, but I couldnt imagine getting it monthly – I didnt have a grasp on my spending when I got it. When I was in school, it was bumped up to every two weeks, and I did well with that.
I think that to break kids of the habit of blowing it all the first time they leave the house with a pocket full of coins, you’ve got to give them tough love – tell them that if you spent all the money right away, there wouldnt be money to pay for the house or food, so you have to control yourself, and so should your kids.
I think the best teens allowance is: Get a Job!! Of course, as a child, it is different. But even then, I did not have an allowance so to speak. My father would bring back some soda cans and bottles from work and we would have to sell them at the grocery to get some money. Or we would be asked some tasks. Allowance were never free. I think it is a better way to teach kids how to use money. They will likely think about it twice before spending it all it they had to work a little for it.
I think weekly allowance is the way to go. I don’t remember when I started getting allowance, but it was a quite a bit later. Probably around Jr. high.
We are doing ours weekly…$5 per child, in dollar bills. They have 3 “boxes” for their money….$2 goes to savings, $2 is theirs to spend, and $1 is for charity.
I had a weekly allowance and I give my kids a weekly allowance but I don’t actually give it to them in cash anymore. They would just spend the 2$ at the mall right away. Instead, I transfer it to their bank account. The piggy bank did not really work since they don’t know how much there is. The bank account is really good and with a bit of time, interest start showing up monthly and it’s another good aspect to teach.