Kids and Allowance: A Good Lesson if Paid Appropriately

Do you give an allowance to your child? 

Many parents often wonder what they should do when it comes to giving an allowance. Giving an allowance can be a great opportunity for teaching important financial lessons. Even very young children can begin to understand the concept of earning money. 

Explain to your child that money is earned by working and that you can only spend what you earn. To help your child understand what it is like to get paid on a schedule, begin paying your children an allowance. Help your children set goals for how they spend and save their allowance, making sure that you as parents stick to the payment schedule. 

Otherwise, the lesson may be lost. 

You can start an allowance at an early age. As soon as your kids start talking about money, you can use the time to teach them valuable lessons. Once you decide to give your kids an allowance, you want to be consistent with the amount and frequency. 

I find most parents have success starting with one dollar for each year the child has been alive. So, if you have an 8-year-old, do $8 a week or $8 a month. 

Whatever fits with your budget. 

Help your child divide the money three ways—a third of the money save for the future, a third to share with a charity or organization and a third of the money to spend on whatever the child wants.