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Starting last year, we slowly introduced some money concepts to our little girl based on her interests.
Now our daughter is beginning to receive an allowance. It's a big transition for us in helping our kid become savvy and comfortable with money.
How Allowances Help Kids
In The Opposite of Spoiled, Lieber discusses how allowances can be a powerful tool in helping kids use money as a reflective of positive values such as generosity and entrepreneurship (check out his full interview on the podcast).
We had a lot of the same questions and conversations about kids and allowances that MB had, so I wanted to share our take and thoughts.
When Should We Start Her Allowance?
While she was learning about needs and wants , we didn't think she was ready for allowance until recently.
Now she wants to help and contribute around the house so we're thinking an allowance would good for her.
Experts suggest starting an allowance around the time they start kindergarten, but you have a clearer on what your child can handle.
How Much Should the Allowance Be?
Currently the average American family that pays an allowance spends about 50 cents per year based on the child's age a week. So an 8 year old would get $4/week.
Seeing as this is her first time having allowance, we decided to start small.Every Friday she gets a $1 for her allowance.
It may seem low, but she seems happy with it right now. (Maybe she can learn how to negotiate for a raise by arguing her case to us 😉 )
Should We Tie Her Allowance to Chores?
Right now her allowance is not tied to chores. We're a family and to keep things manageable, all of us have to contribute.
We expect the essentials (tidying up her room, feeding her cat) to be done regardless if she gets an allowance or not.
The good news for us is that she enjoys doing ‘big girl stuff' so we don't have a problem with her cooperating with chores.
If she does (and we expect it will happen), then we'll take away a privileged, like tablet time.
How Do We Encourage Saving and Giving?
We want our daughter to get into the habit of saving and giving, so we have her tuck away money in envelopes I've picked up.
What we’ve been doing before was depositing gift money in her saving account so it could earn some interest at our bank (Capital One 360).
We'll continue to deposit a portion of her gift money into her savings. With the allowance, we'll reserve those savings for short term goals (like Lego sets).
As for giving, we're going with gifts for her friends as a starting point. She spends money on material and then makes something for them.
Your Take on Kids and Allowances
We'll be keeping an eye on how things go and if we need to, we'll adjust her allowance.
I'd love to get your thoughts and ideas about allowances. How much do you pay? When did you start? Any tips? Please share them below!