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Kids Allowance: Allowing Your Kids to Deal With Money

Sooner or later in the process of rearing your offspring, you may find that it’s not the latest Hannah Montana wardrobe set or Star Trek figurine that they’re pining after; rather, you’ll find them directly targeting the source responsible for fulfilling their desires—money, the root of all material satisfaction.

There are no set rules for determining your kids allowance. The practice of giving allowance varies widely from family to family—some households will utilize allowance and others will not. Some parents lavish enough money on their children to make allowance unnecessary. Other parents choose not to award allowance for fear of spoiling their kids. Yet others require their children to rightfully earn their money, and other families dispense money in intervals to simulate interest on a juvenile savings account.

Should you choose to allow your children a miniature income, you should consider the reason behind your decision. Are you attempting to teach your kids about the value of money, or are you trying to get the task of buying their toys off of your hands? Kids’ allowance should not be taken lightly; the way in which you dispense the responsibility of handling money to your children can greatly influence how they will choose to manage their finances in the future.

Decide on an amount that is reasonable. Too meager of an allowance will foster resentment, whereas an excessive allowance will encourage wasteful spending. Discuss the chosen amount with your kids, and explain to them the importance of maintaining a good balance. This will help prepare them, and yourself, in the event that they compare allowances with their peers. Inevitably, your child will find that they are earning more than some kids, and less than others.

Be reasonable with the amount that is awarded for certain accomplishments—a quarter might be adequate for a quick errand, but not fair compensation for an especially arduous task. It is also prudent to take caution when using allowance as an incentive. Allowance can help motivate your children to complete undesirable tasks, but it can cause your children to lose pleasure in completing tasks they already enjoy. Money gives your kids a reason to do something they don’t want to do, but if they already like to do something, they will begin to partake in it simply for the money, and not for the sake of enjoyment.

Using kids allowance as a reward system, when enforced appropriately, can be an effective way of preparing your children to be financially-savvy when they enter the real world as adults. Make sure to give the matter some careful thought when applying it to your household.

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