How to Figure Out The Right Allowance for Your Kids
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How much allowance should you give? Today I want to share some guidelines to make it easier to figure out the right allowance for your kids!
Figuring Out The Right Allowance
As parents, we want our kids to become responsible, happy, and giving adults. Part of that entails being smarter with their finances than we’ve been.
We want them to understand the value of money and how it can help, but we don’t want it to be their focus.
It can be tough to pass on those lessons when there so many ads being pushed on them to buy STUFF.
We're in the thick of things. We have two young ones – a 6-year-old and an almost three-year-old.
When our oldest was around 4, we were trying to figure out what was the best way to approach things.
Should we start an allowance with her? How do we introduce money? How soon is too soon?
I think all of us are on the same page in terms of what we want for our kids.
We want them to be responsible.
We want them to be smart with money and at the same time, we don't want them to be entitled. We don't want them to be spoiled.
They are a part of a community and we want to encourage them to be generous and helpful within it.
Kids and Money: Right Allowance, Giving, and More
Of course getting our kids to understand and respect how money works isn't going to happen overnight.
It means there's going to be a lot of conversations a lot of wins a lot of losses on both sides.
I've teamed up with fellow mom and Goalsetter CEO Tanya Van Court for a marriage and money workshop to discuss How to Raise Generous and Money Savvy Kids!
We talked about when to start allowances, helping your kids to develop a habit of saving and giving along with finding a system that works for your family.
You can watch the entire workshop below or read an edited version of the highlights here.
As I was preparing for this workshop, I started digging around to see what parents were searching for here on the site.
By far, allowances were the big topic.
Should we do an allowance? Do we tie it together with like chores? How much is a good allowance?
Which Allowance System is Best?
As you might guess, there is a wide range of what families are doing with allowances.
In terms of how much to pay, the consensus seems to be a weekly allowance is around 50 cents -$1 per year. So if you have an 8-year old, you're paying $4-$8/week.
When we started with our little one, we went small. Since she was four at the time, we went with $1/week.
It wasn't much, but it was enough to get her started.
There are several ways you can go with your allowance and chores. The popular options include:
- Allowances are tied to all of your kid's chores.
- Allowances are separate from your kid's chores.
- The final is a hybrid where there are some core chores that are required regardless of allowance and other chores where kids can earn some extra money.
They all have pros and cons, depending on your kids.
The first one can be a wonderful way to teach your kids the value of work (no work = no pay), but what if your kid doesn't really care about having money?
They may be quite content with the essentials (which isn't a bad thing). You may struggle to motivate them to get those chores done.
The second can reinforce how important family chores are, but it may be tricky to figure out a fair allowance. With no chores tied to it, what is the allowance for?
You have to find another way to help them appreciate the value and joy of work.
We use this hybrid with our oldest daughter's allowance.
Tanya also has a hybrid system for allowances. She found it was best for her family because her kids started asking about every single chore and how much they could earn.
Having those core chores allows her kids to learn that everyone pitches in and the allowance gives them a chance to start managing money on their own and earn some extra cash.
Speaking of earning cash, Tanya has implemented a pretty awesome idea with the hustle list.
…..So there are certainly core chores that you see because you're part of the family.
And then I have what I call the hustle list.
The hustle list are things that you can do if you want to make money, so those things are delineated.
…My son, as an example, he raked out all of the leaves in our backyard and it took him a couple of hours to do so.
Her kids get so into it, they sometimes ‘bid' for jobs, like they did for organizing the Tupperware!
Now see this wasn't enough on the hustle list. I just opened up the can.
I want to pull out my hair when I saw those tops and bottom not organized out.
So to clean up the Tupperware, [I said] ‘I'll pay two bucks.'
So then they start bidding.
[He said] ‘I'll do it for three.'
And Gabrielle says I'll do $2.99…
We finally landed on a price.
…So in the few hours yesterday he earned $16. And guess what?
Those were chores that I didn't want to do that I didn't have to do.
Besides an allowance, there are other ways you can pass on money lessons.
Teaching Your Kids Money Through Goals
Teaching kids about money doesn't have to be a boring lecture. You can engage them on their level and interest by focusing on their dreams and goals.
Goalsetter lets kids sign up for goals that are important to them (like dance class, soccer, robotics club, or giving to a cause) and lets parents automatically save for their kid’s goals – big or small along with them.
Do you have friends and family who are looking for the perfect gift for your kid? Tell them about Goalsetter!
They can also contribute to your kid’s Goalsetter account by giving them GoalCards instead of giftcards or traditional gifts (that may or may not get used). How wonderful would it be that their gift fueled a dream?
Thoughts on the Best Allowance for Your Kids
I'd love to hear your thoughts on figuring out the right allowance for your kids. What's your system for allowances? How did you come up with it?
This video was originally published November 2017. Shownotes have been updated November 2022.