First of all, I’m a kid and secondly, I love money.
My answer is absolutely yes – it’s a great idea to give kids an allowance.
What is an allowance?
It’s money given to a child on a regular basis by a parent or a guardian. The money can be used to go towards something specific or left to the child to decide how they want to spend it.
Research has shown that kids who learn about money management at an early age tend to be more successful as adults.
Allowances give children the opportunity
to practice math skills
to learn about handling and managing money
to understand saving and spending
and to discover the basics of budgeting
I am sure we have all seen kids kicking and screaming, begging their parents to buy them things at the store?
If you haven’t, just walk into a Toys R Us on a Saturday.
Kids know if they make a fuss and create a scene, there is a good chance they will get what they want.
These are kids who don’t understand the value of money.
At what age should parents start giving their kids an allowance?
Studies show, if you start at age 5 or 6, kids are old enough to understand the difference between want and need. They are also old enough to be taught how to keep their money in a safe place.
Now the big question - how much allowance should a child receive?
If it were up to me, I’d say $100 month.
But, a common rule of thumb is giving 50¢ to $1.00 per year of age. For example, a nine-year-old good-looking boy like me would receive $4.50 to $9.00 a week.
Just in case you’re wondering, I get $4.50 a week.
Before giving a child an allowance, parents and children should establish some ground rules.
For example, a written agreement is a good way to start.
Parents can state how much they are going to give their child and at what intervals (ie. weekly, biweekly or monthly).
A little tip for parents, give allowances...