How to Set an Allowance for Children

Setting up an allowance for your child is a great way to teach responsiblity, money management and independence. Most experts believe that children should have an allowance by the time they are 10 years old. There are a few factors that will determine how much allowance you should give your children.

Instructions

1. Before coming to an agreement with your children on how much their allowance will be, you should form a budget to see how much money you will have available to give them each week. It will then be another responsibility for you, the parent, to be able to give them their allowance. If you keep to your promise, and give your children's allowance on time each week you will be giving them a positive experience.

2. You can discuss with your children if they need to perform certain chores each week before they are given their allowance. It is up to you to decide if you'll base the amount of allowance you give by chores. If you do require chores to be done, you should explain to your child that they are receiving the money due to their hard work. This may help prompt them into realizing that hard work can pay off.

3. You will also need to decide if the child is allowed to buy anything with their allowance or if you want to set up a type of savings account for them. This can teach them the importance of saving money. By giving them money, you will be allowing them to make financial decisions that you may not be happy with. Some types of video games, music and movies may not be appropriate for their age, and you may need to set some boundaries as to what they are able to buy.

4. Some experts say that you should pay children 50 cents to a dollar for every year of their age. For example, a 10 year old would receive $5 to $10 each week. Then, on their birthday each year you can raise the amount of their allowance.

5. Teenagers may also want to have money to spend clothes on, in addition to their regular allowance. Some parents will give them a quarterly clothing allowance which allows them to set a budget for the amount of clothes they can buy. This will help children realize that if they decide to buy a $75 shirt, they will have to make sacrifices for other articles of clothing.

6. You may want to draw up a contract with your child agreeing on the terms of their allowance. This way they can get a better understanding of what is expected of them and what they will get in return for their chores.

Tips & Warnings

• Be on time when giving your children their allowance.

• Be clear on what the terms are in order for the child to recieve their allowance.

• Give your children freedom and independence when making financial decisions. They will need to learn on their own how far a dollar will go.

• If you don't always give your children's allowance on the agreed day, they may not always do their chores on time. To keep them motivated to do their chores each week, be sure to pay them on time.