Top Five Allowance Mistakes

Here are the top five mistakes parents make when giving allowance to their kids and teens.

1. Not Giving Enough Allowance

Most parents don’t give a large enough allowance for their child to buy anything substantial. You need to decide on what you expect your child to pay for and then give them a large enough allowance to do so. If it takes too long for a child to save up to buy something, they will become frustrated and the lesson will be lost.

2. Not Paying Consistently

We are all forgetful (and more so, the older we get!) but you need to remember to give your children their allowance on a consistent basis. How would you like it if your boss “forgot” to give you your paycheck? Try to pick a day and time each week to be designated as “allowance pay day.” You can add a repeating reminder on your electronic calendar or tell your children to put “Pay Day” on their own calendars – they’ll be sure to remind you!

3. Not Setting Rules for Savings and Sharing

Usually parents give their child an allowance and think “ok, I’m done.” But allowance is more than letting your child just spend, spend, spend. You need to help them set the rules for what percentage (or dollar amount) of their allowance they will save and share. By helping them learn to save for a goal, they will learn delayed gratification. By learning to set aside part of their allowance to give back to the community, you will be teaching them to be compassionate. 

4. Not Using Your Everyday Routine to Teach about Money

One big mistake is not taking advantage of everyday life to explain how money is all around us. A trip to the grocery store can lead to a discussion about your family food budget. The ATM machine can be a great way to talk about earning an income, depositing your salary in the bank for safe keeping, and then withdrawing your money when you need it. The list of everyday money topics is endless. Start with the basics and let your child ask questions.

5. Not Connecting your Family Money Values to Allowance

Who do you want to teach your children about money? The advertisers? The credit card companies? Our children are bombarded with endless media messages via TV shows, phone apps and internet access. Allowance is an opportunity to pass on your money values to your children. Before you begin giving an allowance, have all family members compare their own money values on earning, spending, saving and sharing so that you can avoid giving conflicting messages to your children. If you take the time to incorporate your values, you will have a successful allowance program.

Don't forget to check out my blog for more information: Financial Coach for Kids & Teens