How To Choose An Allowance For Your Child

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Your six-year-old daughter walks up to you and asks why she doesn’t get an allowance when all her friends get one. You start to wonder, is it really required? Well, what do they do with it? Is she old enough to handle money? If yes, how much should she get? Giving an allowance to your little ones also introduce them to money management skills at a young age, enabling them to understand the value of money, and it might also teach them how to save and use their limited resources wisely. The key to setting the right allowance for a child lies with the parents because it also depends on how much they can afford, the child’s age, and how the child is likely to spend the allowance. Some parents believe in just handing over a wad of cash to their child at the beginning of each week, while others would teach their children to earn their allowances by assigning them simple tasks that are rewarded accordingly. Here are a few tips on choosing an allowance for your child:

Tips On Choosing Your Kid’s Allowance
The amount of allowance, which you would shell out, will depend on various factors and you need to measure all the pros and cons of giving allowances before you settle on the amount. You need to ask yourself some questions before you set an allowance for your kid. Some questions, which you would need to ask yourself and your kid, are given in the following pointers.

Q1. What is the purpose of giving your child an allowance?
Before setting an allowance for your child, it would be wise to ask yourself this question. It could be a basic lesson in handling finances or granting your child a little freedom in spending or as a reward for good behavior, better grades, helping out with chores, depending on the priority of the parent. The geographical location and the lifestyle of the parents are also contributing factors.

Q2. When should you start giving your child an allowance?
Every child is different and has slightly different growth patterns, but children between the ages 6 and 10 would be the most appropriate category to start receiving an allowance. Starting an allowance once the child has learnt basic math skills would also help the children in computing their budget and enable them to spend more wisely.

Q3. How much should your child’s allowance be?
Your child’s allowance typically would reflect your lifestyle and the strata of society that you live in. You could start off with a basic amount that you feel would be sufficient for your child’s age group and activities that they are involved in. It is advisable to gradually increase the amount, as they grow older.

Q4. What is expected of the child in return for the allowance?
Generally parents who are slightly well-off do not expect much in return for the allowance that they dole out to their kids, but parents who are a bit more prudent about raising children will make sure that the children get their allowance in return for getting good grades, for good behavior, etc. Child-development experts don’t usually agree with giving children an allowance in return for doing chores, as they feel it robs them of an opportunity to contribute to the family based on love and belonging and teaches them that they should be paid for their contribution to the family. Although it might be true, a huge chunk of parents generally tend to believe that it induces a sense of responsibility in the child from a very young age.

Q5. How do you expect your child to utilize their allowance?
Speaking to children about their expenses will help you determine how they are likely to spend their weekly allowance, you could explain to them about the importance of saving up for future uses and also inculcate in them a habit of sharing.
There are no thumb rules when it comes to allowances and kids, every child is unique and will have a different personality and wants of their own choice. Children in the age group 7-12 works hard at being responsible, being good and will be more likely to respond positively to the introduction of an allowance. The system of providing your child with an allowance helps them to be responsible for their own spending choices as well as their spending mistakes. This could further help your child improve their taste and develop habits of ‘saving up’ from an early age. Meanwhile child experts continue to stand firm on the theory that children with allowances learn fiscal restraint while children without, master only how to manipulate their parents. Since allowances vary from family to family, it is something that both parents and children will have to work at, hence communicating with your children is a necessity, and after all, they learn all these qualities from you, the parent.