Allowances and Chores
||Learn the best way to set your child's allowance and whether you should reward your child for helping out with household chores.
Kids and Money:
Calculating your Child's allowance
Appropriate age groups:
K-5 and up.
Description of technique for teaching kids the value of money:
For younger kids:
A good (and fair) way to calculate your child's allowance (especially when you
have more than one) is to take the child's age and divide it in half. For
example, if your child is 6 years old, half of that is 3. Your child's allowance
is $3 per month (if you're wealthy you can make it $3 per week). This is fun
because they know each birthday gets them a raise in their allowance.
For older siblings:
The older they are the more money they get (based on the age-based allowance
described above). For older kids, it may be wise to agree to make adjustments
for special cases such as an upcoming school trip where more spending money
might be helpful, etc.
Develop a money management plan together:
Once the allowance amount is established it's a good idea to sit down with your
child and establish a money management program or financial plan.
Begin by designating 35% of their allowance as free spending money. Theirs to do
with what they want, it gives them the personal freedom to spend. At least half
and in this example 55% of their money must be saved.
You can start small children saving with a piggy bank, older children can open
their own savings account or if you are stock and mutual fund savvy, get them
investing early and on a regular basis.
Have the kids give the remaining 10% to charity. That means if they get $3 per
month, 30 cents should go into the church collection box each month or a
collection can. McDonald's takes donations for the Ronald McDonald House or most
local grocery stores display cans for numerous other charities.