Allowance for kids

by Christine - From Dates to Diapers on November 21, 2009

Allowance…it can be a difficult decision. To give it or not, how much to give, and for what purpose? Through the years I’ve read a lot of great, but conflicting, advice from financial gurus and Christian leaders alike. What I found was that there is more than one right way; we each need to adopt the system that works best for our family, one that instills the values and lessons we wish to impart. The main lessons my husband and I want to impart are responsible money management, the importance of saving, the importance of giving and the detriment of debt.

So with these goals in mind, when our son was young we sat down and worked out our allowance “rules”. They aren’t rules per se, more like guidelines. We understand that as children grow and change the rules will too. Here is what worked for us.

The Early Years:

  • Open each child their own savings account
  • 25% of their allowance is to be be deposited into savings each week
  • The savings account is not to be touched (we will consider allowing them to use part of it when it is time to purchase a car)
  • One dollar for every year of age is allotted (5 year old gets $5 a week etc.)
  • Chores are not done for allowance, they are the teamwork required for a smoothly functioning family unit
  • However, allowance is not a right and if the chores are not done, poorly done or attitudes need adjusting the consequence may be the loss of one week of allowance
  • Gift purchasing costs (Christmas, friend’s birthdays etc) will be split 50/50 between child and parents
  • There will be no allowance advances, that is called being in debt. They must save for their desires
  • They must give regularly to whatever cause they would like to champion. It does not have to be monetary giving. They can give of their time and effort.

These were our guidelines and we were happy with the results. It could have been better of course. When our youngest, now 2 years old, reaches allowance age we will most likely make some changes. I think it will work better if we he immediately gives us back the 25% required for savings and we then deposit it for him. I’ve found that when left to the child, saving usually slips through the cracks.

We coasted pretty smoothly on the above system until our son was about 12. Then we began noticing a few hiccups. He started saying things like “You can just put it on your card, Mom” (I use a debit card instead of cash or credit) or “I’ll pay you back later”. That wasn’t going to fly. So again, Hubby and I sat down and worked out a new system for the teenage years. One that has been working beautifully I must say. I am now hearing my son say things like “I can buy that cheaper at Walmart” or “I’ll wait and see if it goes on sale”. Ahhh, music to this mother’s ears. He’s thinking, planning and acting responsibly. Here are the new rules we implemented.

The Pre-Teen/Teenage Years

  • Open each child a checking account, teach checkbook skills
  • 25% of allowance is to be deposited into savings each week
  • The savings account is not to be touched (we will consider allowing them to use part of it when it is time to purchase a car)
  • The new allowance amount is calculated by the equation: cost of clothing and entertaining the child divided by 52 weeks (*for us it was $25 a week, but it could be more or less for you based on where and how you live)
  • The child now purchases his own clothes, entertainment and extras
  • Any large purchases need to be approved by Mom and Dad
  • Chores are still part of life
  • Allowance can still be lost as a consequence of poor behavior
  • Gift purchases will now be split 75/25 (child/parent)
  • Still no advances, you must save for your desires
  • They must give regularly to whatever cause they would like to champion. It does not have to be monetary giving. They can give of their time and effort.

Now before you flame us for being cruel, let me clarify. We don’t expect our son to purchase everything for himself. We do lots of things as a family and pay for all the activities, movies, dinners, field trips etc. Our son is only expected to purchase his clothes and extras. “Extras” include last minute trips to the movies with friends, playing 500 rounds of games at an arcade or some chintzy toy I refuse to spend my husband’s hard earned money on.

At $25 a week I feel that arrangement is more than fair. And best of all it’s working for us. The first time my son had to buy a new winter wardrobe he spent over $150-6 weeks worth of allowance-at PacSun on skinny skater jeans. He had no money left to buy the desired hoodie sweatshirts. He hasn’t made that mistake again. He’s now weighing each purchase carefully. He’s suddenly realized that $200 really isn’t the best deal on sneakers :) He’s budgeting and that brings me joy because this simple knowledge will serve him well later in life.

How about you? What allowance rules work for your family?
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Cheryl is a happily married, Christian, stay-at-home mom of two boys. On Adventures of a Somewhat Crunchy Mama you’ll find her opinions on travel destinations, books, movies, homeschooling, good food and wine as well as all things child-rearing and homeschooling, with the occasional product review or giveaway. She also authors The Unadorned Book, which offers book reviews and author interviews.

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{ 4 comments… read them below or add one }

Adrian November 21, 2009 at 10:40 pm

I am terrible about the allowance thing. I do it for a while, then I forget and the kids don’t really keep after me about it because I don’t make them pay for as much stuff as I should. The problem I have is that I rarely carry cash myself, so I often don’t have the money on hand when it’s time for allowance. I wish you could do debit cards with 10 year olds. I do get better with my older boys. My DS20 pays for his own insurance, part of his cell phone, most of his clothes, his meals at work (if he chooses not to brown bag it out of our fridge), and all his own gifts. DS28 has been wonderful about money. Married for 5 years, he never asks us for money and both boys are very good about managing their money. So I guess I did something right despite my hit and miss allowance schedule.

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Muthering Heights November 21, 2009 at 11:27 pm

My kids are FAR too young for allowance now, but these are great ideas for the future! :)

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Val November 21, 2009 at 11:45 pm

I am looking for some tips on allowance, chores, etc. Thanks for providing a lot of good ideas! :) I really enjoy your blog!

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Bill Dwight at FamZoo April 19, 2010 at 1:43 pm

I really like the teen guidelines and how the allowance is calculated on a budget that is tied to the things that the teen is expected to pay for. So many parents ask “What is the right amount for an allowance?”. There is no absolute right amount. I think your approach is exactly right: (1) figure out what you expect your child to purchase (2) make a budget with your child based on your family’s situation (3) set the allowance to match the budget.

The one case where we have given “advances” is when a child incurs a large unexpected expense (driving citation, huge cell phone overage charge, parking ticket, etc. – It happens!) In that case, we debit their account so it goes negative (one of the advantages of a Virtual Family Bank) and make them pay it off over time with their allowance. They have to forgo purchases of other items in the meantime.

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