Is It Time to Start Giving Your Child an Allowance?

Happy holidays!

As the holiday season wraps up and we look toward the new year, I've been thinking a lot about milestones. Just the other day, my friend's kid turned four, and it hit me – my boy Evan will be four soon too, in just a couple of months. This got me thinking: He wants to buy things when we go to the shops and can do basic counting, so it's probably a good time to start giving him an allowance.

When to Start Giving Kids Allowance?

The general consensus seems to be around ages five or six. However, some suggest starting as soon as the child understands that money is needed to buy things. In my opinion, it really depends on the child. I believe a child is ready for an allowance when they express a desire to buy something at a store and understand basic counting – like up to 20, since most snacks and toys fall under this amount. Another key indicator is if they can compare two numbers and understand which is bigger. By looking at a price tag, they need to know if their $5 is enough or not.

How Much to Give:

The rule of thumb for paying an allowance is $1 per week for each year of the child's age. Therefore, following this rule, a 10-year-old would receive $10 per week, while a 16-year-old would get $16 per week. I find this a practical guideline to start with; however, it also depends on the family's financial situation.

What Are They Allowed to Buy:
What children are allowed to buy with their allowance can vary greatly depending on family values, the child’s age, and the goals of teaching financial responsibility. Generally, parents may guide or set rules for spending, but it's also beneficial to allow children some freedom to make their own choices.

When Should You Give Allowances:

The debate between weekly or monthly allowances is ongoing, but in my view, both are fine. The key is consistency. If you decide to give your child an allowance on the 1st of each month, make sure the money is there on the 1st. And a crucial point – never punish your child by skipping allowances. They need to feel secure about their money; it’s part of teaching them financial responsibility.