Help your kids make the most of their allowance money
Canada Life - Nov 01, 2023
Giving an allowance to your kids can be a great way to teach them about managing their own money. This can help make budgeting a practical, and even fun activity
Giving an allowance to your kids can be a great way to teach them about managing their own money. This can help sow the seeds of healthy financial habits early on in them. It makes budgeting a practical and even fun activity. But how much is enough and how often should you give them an allowance? Should allowances be tied to chores? How can you ensure they’re managing their allowance money wisely? If you’re thinking about these questions, here are a few ideas to help you be on top of the allowance game.
Set an allowance amount
Be clear on the amount you’re going to give as allowance to your child each week or month. One common way to calculate a weekly allowance money is to add a dollar for every year of your child’s age. For example, you’d give your twelve-year-old $12 per week and so on. A set amount will help you manage your child’s expectations for how much they’ll receive.
Create a consistent payment schedule
Once you’ve determined the amount of allowance to pay to your child, the next step would be to decide on a payment frequency. This could be weekly, bi-monthly or monthly, depending on what works best for you and your child. You could even set specific dates such as the first or 15th of every month. This way, your child can plan their expenses around their allowance payments.
Set clear rules around spending
Allowance money should come with responsibilities. You could help your child navigate this responsibility by discussing what all they should pay for. For example, should they pay for movies, coffee dates with friends, accessories or items to support a hobby? Clear rules will help your child learn the art of budgeting. Once they start that, you can help them track expenses with simple budgeting apps or even plain old pen and paper.
Tie it to chores or not?
There are different schools of thoughts (read opinions) around this topic. Some experts are strictly against tying allowances to chores. They feel your child should be helping with these anyway. Others suggest some larger projects – think painting or building a deck – might open up opportunities for your child to earn additional allowance.
Have open discussions
It’s always a good idea to have age-appropriate money talks with your children. It can help them feel involved in the family’s financial planning. Have open discussions on what your family’s overall goals are. This will help them see the big picture and understand how they can manage their allowances to help achieve those goals. These discussions could also help you see any stumbling blocks your child has with managing their allowance money.
Giving your child an allowance when they’re still young can help set them up for financial success later in life as they learn to budget, save and spend money in a disciplined way. If you would like to chat more about how to make allowances part of your unique financial journey, let me know and we can set up time.