Allowance: The Important Pros and Cons You Need To Know

What Are The Pros Of Providing Your Children An Allowance

Here are a few of the benefits of providing your children with an allowance:

  • An allowance, if handled properly, can teach your children important lessons about finances and the responsibility involved with money. It can help them learn the importance of budgeting and saving for larger purposes.
  • If the allowance is tied to chores, kids learn the relationship between work and being paid for your efforts. Helping your child understand the correlation between work and reward will set them up for their future careers.
  • Allowances provide your children spending money for frivolous things they might want to buy. It doesn’t save you any money because, in reality, they’d just ask you for $5 to go to the mall but at least with an allowance they’ve earned the money.
  • Money is a big motivator for children and adults. Tell your child they’ll get $20 if they help you build a new shed in the yard and they may be quick to jump in and grab a hammer.
  • Some parents use an allowance system as a way to teach children about donating to worthwhile causes. Tell your children you’ll donate $1 for every dollar they donate each month to the charity of their choice and you’ll be teaching them an important lesson about helping others less fortunate

What Are The Cons Of Providing Your Children An Allowance

Even though providing an allowance can be a tool to teach there are some cons for providing an allowance.

  • Doing something around the house and helping out does not always deserve a reward or some sort of monetary value placed on the action. Sometimes helping out is just that, help.
  • If your children have saved all their money and have enough in the bank they may decide they don’t need to do anything else as they have enough.
  • If you are on a tight budget at home and barely making it by as it is, then having to come up with an extra $10 or $20 a week for an allowance may be too much for you.
  • The flip side of learning the positives of money is the negatives of money and some of the potentially bad purchases they can make.
  • Children may begin to use the allowance as a bargaining chip when asked to do a little extra. I am all about negotiation but asking you to take out the garbage one week is not grounds for “a raise”.

What Age Is The Right Age For An Allowance?

It’s up to you as a parent to decide if an allowance is right for your children or not. If you decide on yes then the next question is what age should you start. Yet another decision to face.

What’s The Going Rate for Allowances?

Now that you’ve decided to provide an allowance how much is the right amount? A popular method is paying them an amount equal to their age. 8 years old nets you $8 a week. Each year they get a built-in raise as long as they are doing their job. This lesson is helpful later in life when they receive annual reviews from their employer.

The Best Way To Give Your Child An Allowance

There are a few ways to handle paying out each week. The simplest way is to provide the cash and have them put in some sort of piggy bank, jar, shoebox, or whatever they want to use to hold their money. Don’t let them just throw it in a drawer where it can get lost or destroyed. This is not teaching them a good lesson about the importance of money. Visibly seeing their money grow each week is exciting for your child to watch so this is a great option.

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