At some point in their lives, most parents find themselves wondering how much money they should give to their child for an allowance.
Some think that giving their children an allowance spoils them, while others think that periodically giving kids money helps them to learn how to manage money. Many people believe their children should receive money in return for chores and household work instead of simply receiving an allowance regardless of effort. There are many factors someone must consider before starting an allowance for children, including the following:
Are Your Children at an Appropriate Age?
What is the appropriate age to give kids an allowance? If your child is starting to ask about how much things cost, then he or she might be ready for an allowance. Also, if your child knows that it costs money to buy things and that saving can get you what you want, then it is time to consider starting an allowance for them. It is difficult to determine when this mindset will develop in a child, many believe that six is a good age to start giving kids allowance.
What is the Right Amount?
Once you decide that it is time to start an allowance for your child, you must ask yourself how much you should pay your child. It is wise to teach your children the importance of patience and earning money. Start paying them small amounts of money and let them save up for whatever it is that they want to purchase.
What are Your Children’s Expenses
Another thing you should consider before starting an allowance is your child’s needs. Determine how much he or she needs to spend. When kids grow older, they might have to spend money on clothes, shoes, and other such items. They might also need money to buy lunch at school. Before you set up a specific amount to pay them, make sure you know how much money they will need.
Do my Children Know how to Save?
Teach your kids the importance of saving before you start giving them money. If you teach kids the importance of saving, the money you give them won’t be spent on useless items, but instead, will be saved for future purchases. Teach your children the concepts of spending and saving, along with the concept of giving. It is also advisable to teach them to be humble and charitable, and that the money they receive shouldn’t only be spent on their own wants and needs.
A Sample Formula
A great formula to use for allowances is to give your child their age times four per month. So if your child is six years old, they would get $24 a month. As your child grows into their teens, their needs and wants change as well. As they age, the things that they would like to buy are more expensive and the increased allowance will help them with larger purchases. Another great thing about using an age-based formula similar to this one is that it is easier to be fair to all of your kids.
Help Children Make the Most of Their Allowance at First Alliance Credit Union
Before you start giving your child an allowance, you should make sure they're ready for it. You can do this be asking if your children are at an appropriate age, determining how much allowance you should give them and making sure they have good spending and saving habits.
If you want to help your children make the most of the allowance you give them, have them become a member at First Alliance Credit Union. They'll be able to open up a youth savings account where they can deposit the money they want to save from their allowance and see their money earn interest on the online banking account. Parents can even use their online bank account to keep an eye on their child's account.