Choose the Best Allowance for My Child

8/14/2019 Choose the Best Allowance for My Child

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Choose the BestAllowance for My Child

Build Kids' Money ManagementSkills

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Table of ContentsHold a Family Summit on Allowances for Kids

Set the Right Amount for My Kid's Allowance

Help My Child Create a Spending Plan

Worksheet: Spending Plan

Create an Allowance Both My Kid and I Will Love

Real Life Story: Making Allowances

Allowances 101

Is My Kid's Allowance Working?

Am I Paying the Right Amount for My Kid's Allowance?

www.EduGuide.o2 ONLINE EDUGUIDE


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Choose the Best Allowance for My ChildBuild Kids' Money Management Skills

Do I need this EduGuide?

Yes, if you want to develop a kids allowance system that teaches your child finance skills that will carry over into adulthood. ThisEduGuide can help you determine how much allowance money for kids is best and solve parents problems making an allowancesystem run smoothly.

How does it work?

l Quizzes help you know where you stand.l Articles give you the background information you need to make a decision.l Real Life Stories tell the experiences of real parents and real kids.l ShortCuts help you take immediate action. Choose one or go through them all.

What will I learn from this EduGuide?

l How to set up an allowance system the whole family can live with, including how much to pay and what to expect in returnl How to help children set up a budget and spend allowances wiselyl How to solve common problems parents and kids have with allowances

Quick Solutionsl What can I do in fifteen minutes? Take one the quizzes in this EduGuide, Am I Paying the Right Amount for My Kids Allowance

or Is My Kids Allowance Working? to figure out how well your familys allowance system is functioning.l What can I do in an hour? Read the ShortCut Help My Child Create a Spending Plan: A Simple Budget Teaches Practical Life

Skills and discuss the information with your child. Help him or her get excited about creating a spending plan.

http://www.eduguide.org/Parents/Library/Detail/tabid/304/id/2299/Create-a-Spending-Plan.aspxhttp://www.eduguide.org/Parents/TakeQuiz/tabid/114/view/StepTakeQuiz/quizId/43/Default.aspxhttp://www.eduguide.org/Parents/TakeQuiz/tabid/114/view/StepTakeQuiz/quizId/44/Default.aspx


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Hold a Family Summit on Allowances for KidsThings to Do Before the Summit

1. Two weeks ahead: pick a date. Write it on a calendar everyone in the family can see. Explain briefly that the meeting is abouteach kids allowance and make sure everyone knows the meeting is mandatory.

2. One week ahead: make copies of the Spending Plan Worksheet for each family member . Ask everyone to have theworksheet finished in time for the meeting.

3. One week ahead: tell everyone to keep track of all their expenses for the week on the Spending Plan Worksheet . Ask themto keep notes on what they spend money on, what other people spend for them, and what things they need money for but cantbuy.

4. One day ahead: pick a comfortable, quiet location for the meeting . Turn off the TV, the computer, and the cell phones.Choose a setting where everyone can talk and listen easily.

5. Day of the summit: make the meeting fun . Order a pizza or make popcorn to get everyone in a cheerful mood. The topic isserious, but the meeting doesnt have to be.

How to Conduct a Summit on Allowances for Kids

1. Start the meeting by reviewing each persons Spending Plan Worksheet . After all family members have had a chance toshare, ask people to name any unusual expenses they listed or any usual expenses that were not listed. Discuss whether thelist is fairly typical. Take a look at what items each person wanted to purchase but was unable to.

2. Discuss why saving is important . Ask each family member to give a reason that saving is important. Be sure to cover settingup an emergency fund, saving for college, and using savings as a way of avoiding debt. With younger children, pick a larger item on their want list and figure out how long would it take for them to save up for it (for a ten dollar item, saving two dollars aweek would take a little more than a month). For older children, talk about some of their longer-term goals. For example, dothey want a car for their junior or senior year of high school? How much would they need to save between now and then?Determine together what might be a reasonable amount to set aside for that goal.

3. Talk about your familys values regarding giving . Are there charitable organizations that your child is passionate about?Discuss giving as a family value and also the role you feel giving should play in family life. Talk about the best way to give andlet each person establish an amount he or she feels is appropriate.

4. Establish an amount for allowances . Determine an appropriate amount for allowances and discuss how allowances will bepaid (in cash, by check, directly into a bank account, on a particular day, etc.)

5. Create a spending plan for each person . (See the ShortCut Create an Allowance Both My Kid and I Will Love .) Ask your children to have the spending plan ready to show you by the time they are due to receive the first allowance after the summit.

6. End the meeting on a positive note . Talk about what everyone has learned from the meeting and what strategies you will usewhen you meet next time.

After the Summit

Review each childs spending plan. Be prepared to help out if asked, but dont dictate how the child should spend. Rather, offer yourself as a resource to answer questions and help set up any system that might benefit the child such as a jar for savings or envelopes in which to put money.

http://www.eduguide.org/Parents/Library/Detail/tabid/304/id/2336/Childrens-Allowance-Common-Parents-Problems.aspxhttp://www.eduguide.org/Parents/Library/Detail/tabid/304/id/2303/Spending-Plan-Worksheet.aspxhttp://www.eduguide.org/Parents/Library/Detail/tabid/304/id/2303/Spending-Plan-Worksheet.aspxhttp://www.eduguide.org/Parents/Library/Detail/tabid/304/id/2303/Spending-Plan-Worksheet.aspx


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Set the Right Amount for My Kid's AllowanceFive Options to Help You Decide What Is Fair, Reasonable, and Affordable

Setting the right amount for a kids allowance doesnt have to be guesswork. Choose from the following options to determine a fair rate.

1. Age Many families with pre-K and elementary school age children provide a weekly allowance based on the age of the child (either fifty cents or a dollar per year of age). With this method, for example, a ten-year-old would earn either five or ten dollars a week.

Some parents give kids one dollar per grade level per week (a fourth grader would earn four dollars a week under this system). Aschildren get older, many families switch to an allowance system that takes actual needs into account.

2. Peers Some parents base the amount on the going rate for allowances in their area. If this method seems fair to you, ask theparents of your childs friends what they pay their children and set your childs allowance at a similar rate.

3. Budget In order to teach money management skills, some parents let their older kids pay for the expenses parents would usuallypay with allowance money. To figure out an allowance amount using this method, record everything you spend on your child for amonth. Determine which expenses your child will be responsible for and which ones youll cover. Subtract the expenses youll pay andaverage the rest. Decide whether you want to include money for savings and for charity. When you arrive at a figure, make sure your child understands exactly which expenses he or she is responsible for.

4. Your Childhood Allowance You can choose an allowance amount based on the amount you received as a child, especially if youthink that allowance was effective in teaching you money management. Use an allowance calculator to calculate an amount that isequivalent to the purchasing power of your allowance when you were a kid.

5. Payment for Chores Some experts claim that chores and allowances should be separated (one is meant to teach familyresponsibility, the other to teach money management). But other experts argue that money should be earned not just handed out.

One compromise between these two conflicting opinions is to provide a set allowance and mandatory chores. Additional chores earnextra money. For example, a child may be expected to make the bed, set the table, fold clothes, and take out the garbage. If the childwants to earn extra money, parents might agree to pay two dollars for scrubbing the bathtub or five dollars for washing the windows.

http://pediatrics.about.com/od/toolsandcalculators/l/bl_allcalc.htm


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Help My Child Create a Spending PlanA Simple Budget Teaches Practical Money Skills

A kids allowance is a great tool for teaching kids money management, but creating a spending plan, or allowance budget, with your child enhances the learning. Follow these ten steps to create a spending plan both you and your child can live with.

1. Use the Spending Plan Worksheet to get your thoughts on paper.2. Help your child make a list of expenses. Try not to pass judgment on choices (its your kids money, after all), and dont forget

everyday expenses such as club dues, MP3 downloads, and bus fare.3. Classify each item on the list as a need (an unavoidable expense such as lunch money) or a want (a new purse, a video

game).4. Assign responsibility for each item on the list. Who will pay, you or your child? Explain that responsibility means that your kid

will have to keep track of expenses for each item assigned to him or her.5. Brainstorm possible unexpected expenses such as a birthday party gift or replacing a damaged backpack. Decide whether

you want to set up a fund to cover such expenses.6. Plan for large purchases such as summer camp tuition, athletic equipment, and optional school-related items (a yearbook, a

class ring). Use a school calendar to note anticipated expenses.7. Talk about savings. Buy a piggy bank for young kids, or open a savings account and teach your child how to deposit money

regularly. Talk about the difference between short-term savings for small items such as snacks and longer-term savings for major purchases.

8. Talk about charity. Share your values about giving of time, talents, and money. Talk about how kids can help others, for example, by spending some of their allowance to buy items for a local food pantry or by putting their change in an animalshelter collection container.

9. Write down the plan , sign it, and date it.

10. Evaluate the plan after a month or so. How is it working? What has your child learned from it? Is there anything he or shewants to change? Note: Once your child's budget is up and running, check it yearly at the beginning of the school year or onyour childs birthday to identify unexpected expenses and make necessary changes.

http://www.eduguide.org/Parents/Library/Detail/tabid/304/id/2303/Spending-Plan-Worksheet.aspx


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Worksheet: Spending PlanRecord all expenses for one week.

Notes on Using Your Practical Money Skills

List items that you wanted to purchase but did not:

List items that you might typically purchase but did not in this particular week:

How much money did you put into savings?

How much money did you share with others or give to a religious or charitable organization?

Date Item Purchased Where Purchased How Purchased Amount

10/15/XX Bakugan expansion balls Wal-Mart Dad gave me money for it $13.95



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Spending Plan

My current weekly allowance is: __________________________________________

Each week, I plan to put into savings: ______________________________________

Each week, I plan to give to others: ________________________________________

Weekly Expenses/Spending Amount



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Create an Allowance Both My Kid and I Will LoveHow to Solve Common Allowance Problems

These solutions to typical allowance problems will help you create an allowance system the whole family can live with.

Problem: Money is very tight. I cant afford to pay an allowance.Solution: If the family budget is so lean that paying an allowance seems a huge hurdle or a financial crisis keeps you from being ableto pay the agreed-upon amount, consider these ideas:

l Base the allowance on what you already spend on your child. Then tell him or her exactly what the allowance is expected tocover, for example, lunch money, toy purchases, or movie tickets. That way you dont have to look for extra money in the budgetbecause you are simply transferring the financial responsibility to your child.

l It is reasonable to cut allowances when the family is undergoing financial hardships. Adjusting an allowa helps teach your child how to save when times are tight.

l If you have to temporarily suspend allowances because of unexpected bills, medical problems, unemployment, or any other reason, explain why this step is necessary. Also, keep track of missed allowances and try to repay them after the emergencyhas passed.

Problem: The childs other parent and I cant agree on our kids allowance.Solution: Parents often have very different ideas on the amount of allowances, what they should be based on, and how frequently theyshould be given. Like any other parenting issue, this one can require discussion and compromise. If you cant reach a compromise,consider letting kids have separate arrangements with each parent. Keep each other informed, but let the child know that any financialnegotiations must be made with the parent paying the allowance. This is especially important for parents who are separated and have

joint custody arrangements.

Problem: I keep forgetting to pay my kids allowance.Solution: Take paying your childs allowance as seriously as other financial obligations. Try one of these ideas:

l Link the allowance to your payday and get the money for your childs allowance when you cash your check.l For older children, set up a bank account with a debit card. If your paycheck is deposited automatically, have some of it diverted

into your childs account. This will help encourage savings and let you teach your child finance skills like balancing a bankaccount.

l If you keep a calendar, mark allowance dates on it to remind you when to pay.l Set up a reminder on your cell phone or in calendar software.l Pay a small penalty (a quarter or fifty cents) for each day the allowance is late. This will demonstrate to your child what happens

when people are late paying their bills.

Problem: My kid keeps losing allowance money.Solution: As tempting as it may be, dont make up the money. Instead, do the following:

l Help your child search for the money.l Help your child figure out why the money was lost and come up with possible solutions for next time. For example, if your

childs pocket has a hole in it, he or she could buy a wallet with the next allowance.l Provide your kid with something to keep the money in such as a bank, an envelope, or a jar.



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Problem: My child makes poor financial decisions, so I have to decide how to spend the allowance.Solution: Many parents have trouble relinquishing control over how allowance money is spentespecially when a child spendswastefully. Unless the purchases are unsafe or violate your familys values, dont interfere. Let your kid make mistakes and learn fromthem. After all, making mistakes now with small amounts of money is far less costly than similar mistakes would be when your childgrows up.

Dont rescue your child when he or she has misspent an allowance and doesnt have money for something important. For example, if you expect your child to pay for lunch from an allowance and the money is gone, have him or her make a lunch to take to school.

Problem: The allowance doesn't cover special expenses.Solution: Consider teaching your child to manage larger amounts of money by giving a special allowance for specific expenses. For

instance, you could set up a gift allowance for birthday and holiday gifts.

Clothing allowances are a good way to teach older kids how to manage substantial amounts of money. Give your child the money youwould spend on clothes for back to school or the school year and explain that the money is only to be used to buy clothing. Make surehe or she understands that you wont be adding any more money to the budget later. If your child asks for advice, give it, but let him or her make the spending decisions and live with the consequences.

Problem: When my kid doesnt need money, he or she doesnt do chores.Solution: Give your child a set number of unpaid vacation days a year. Explain that there is no penalty for not doing chores (other thannot getting paid) for this number of days, but after that, there are consequences such as decreasing the amount of the allowance untilyour child demonstrates reliability. For example, if your teen has used up the vacation days and decides not to launder the familytowels, you could dock the clothing allowance.

Another tactic is refusing to do a chore that your child expects from you such as driving to sports practice or packing a lunch. Point outthat since your child isnt keeping his or her part of the bargain, youve decided not to keep yours.

Problem: My kid spends the allowance immediately.Solution: This problem will likely solve itself if you dont intervene. This means not giving advances on future allowances or paying for things the allowance is meant to cover. Let the child experience the consequences of being broke. Your child may be more careful thefollowing week, or it may take several weeks for the lesson to sink in.

If the allowance system is set up for the child to add to savings and give to charity, youll need to address the consequences of borrowing from the other allowance accounts. One tactic is to let the child can draw money out for specific expenditures and pay backextra money. Since your child is managing the money, let him or her decide on and enforce the penalty.

Problem: My child complains that the allowance is too small.Solution: This is a great opportunity for your child to learn financial negotiation skills. Have your child to make a formal proposal for an

allowance increase that includes the following information:

l Why the increase is neededl A list of expensesl How the increase will be spentl What additional chores the child is willing to do to get the increase

After you read the proposal, explain why the allowance is at the current level. Let your child respond. Based on your childs proposaland the negotiations, decide whether or not to increase the allowance.

Problem : My child lends money to siblings or friends who dont pay it back.Solution: This is a lesson that can be very difficult for a child and the parent who wants to cultivate generosity and kindness. Thesesteps can help.

l Find out exactly what happened.l Listen carefully to your childs explanations and feelings about the incident.l Discuss the damage lending can do to a friendship as well as praising your childs generosity.l Help your child find a solution.l Discuss what your child will do differently next time.

If the loan was made to a sibling, include that sibling in the discussion. If possible, try to lead your kids to an equitable solution suchas the borrowers next allowance getting paid directly to the lenderwith interest.



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Real Life Story: Making AllowancesA Mom Introduces Her Kids to the World of Money

Marie Marfia

The experts say that giving your children an allowance helps instill a sense of the value of money. Childrens allowances encouragethem to establish spending priorities, set goals, and save up for what they really want. With this in mind, I dutifully offered my children adollar a week when they were young and then waited for the miracle of fiscal responsibility to take root in their brains.

An allowance would have been a more effective training tool if I'd actually paid my kids. Frequently, Id forget to get cash before paydayand then offer to take the kids shopping at Goodwill instead of paying them in cash. At the store, the kids' purchases would eerilyreflect their frustration with the paymaster. Nick would pick out a toy that transformed into a weapon of mass destruction. Sam wouldget something sad eyed and fuzzy, and Alice would fall in love with a bridesmaid's dress that cost twenty times what I owed her.

Eventually, the kids got tired of shopping at thrift stores. Alice went to work at the bed-and-breakfast down the street, and the boys got apaper route. Once my children had a taste of regular paychecks, allowances went by the wayside. Now it's interesting to see how their experiences with the world of money have shaped them.

Alice is frugal, works hard, and budgets for expenses. I think this is a natural reaction to being raised by a spendthrift who prefersreading "Best of Craigslist" to actually working and who balances her checking account by intuition. However, a bad example is still anexample, so this counts as good parenting.

My youngest son, Nick, is an opportunistic money manager. There are things he'd like to have, but, if at all possible, he'd rather someone else pay for them. And though he's willing to wait for what he wants, his patience has its limits.

"Mom, when's my birthday?"

"In 364 days, Nick."

"Oh. When's Christmas?"

Sam doesn't care enough about money in my opinion, which explains why I frequently find dollar bills scattered in his dresser drawers, balled up under his bed, or being used as bookmarks in his favorite novels. I have told him that this behavior will not earninterest on his money, but he only rolls his eyes at me and says that I'm not being properly philosophical about money.

"You shouldn't think that there's not enough money, Mom. You should think of it as sufficient for your needs."

It's not that I don't get what he's saying, it's just that I don't understand how philosophy will persuade the universe to put money in hiscollege fund.

When I was young, I didn't get an allowance. If I needed money to go somewhere, like a dance or a ball game, I'd ask my dad for it.

"Dad, can I have three dollars?"

"If I had three dollars, I wouldn't speak to you."

"Please?"

He'd reach into his pocket, and I'd hold my breath, wondering what might come out of said pocket. Sometimes there were a couple of



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singles, sometimes a twenty, sometimes nothing but a handful of loose change. With Dad's pockets, you never knew. My manysiblings might have cleaned him out already, he might have had to cover an overdraft on the checking account, or there could havebeen a closing on a house the day before. Growing up, it was feast or famine at our house.

Last week the subject of allowances came up again. I asked Sam whether any of his friends still got one. He looked embarrassed.

"Yeah, I think Kerrian does."

"So, how much is it? Like, five bucks or something?"

"Uh, no. Actually, it's more like fifteen or twenty."

"What? A week? Are you kidding me?"

He shook his head and smiled, and I thought it best to leave the subject alone for a while. My kids are very understanding as far as adollar a week goes, but I hate to think what they'd pick out at the Goodwill store if I owed them each twenty dollars come payday.

Marie Marfia is a sometime blogger, all-the-time worrier, and work-at-home graphic designer who lives in JacksonvilleFlorida's first coast. She writes abouther family because her family is what she cares about most. Her Web site is http://www.dancingmac.com .

http://www.dancingmac.com/


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Allowances 101Parents United

Bridgette Redman

What is important for kids to learn is that no matter how much money they have, earn, win, or inherit, they need to know how to spendit, how to save it, and how to give it to others in need. This is what handling money is about, and this is why we give kids anallowance.

Barbara Coloroso

Before you start handing over the dough to your eager spender, be sure that you and your childs other parent are in agreement on thequestion Are we ready to give our child an allowance? Take some time to talk together about your attitudes toward money and whatyou want to teach your child about money. Were you taught that money is the root of all evil or the only thing you can count on in life?How do you each handle money? Who is a spender? A saver? If parents live apart, who will give the child an allowance? How will yousplit this obligation?

If you disagree, work out your differences before you put your childand the very loaded issue of moneybetween you (see WhenParents Discipline with Different Styles ).

1. What is a good age to begin an allowance for kids? Children should know how to count and be able to recognize units of moneybefore they get an allowance. Begin an allowance either when the child starts school or when he or she begins to show an interest inmoney.

2. How much should I start with? Give your kids enough money to be able to make small purchases every week but not so much thatthey can purchase everything they want as soon as they want it. Look at what you can afford and factor allowances into your budget. Itis best to under promise and over deliver.

Though they dont get a vote in the matter, be sure to talk with your children about the allowance amount and why you chose what youdid. Explain to them what you expect them to pay for versus what is money that they can choose how to spend.

3. Should childrens allowance be associated with household chores? This is a huge question that divides experts as well asparents. Experts who advise against basing an allowance on chores argue that chores are meant to teach family responsibility whileallowances are meant to teach money management. It is possible that some essential household tasks (such as feeding the dog)could get skipped if a child decides to do without an allowance that week.

Other experts argue that giving children money for nothing creates a sense of entitlement and that money should be earned, not

simply given. They suggest giving an allowance based on how much responsibility the child has around the house.

Whichever plan you choose, explain your reasons and expectations carefully. One compromise between these two conflictingopinions is to provide a base allowance amount that does not change coupled with basic chores, which are not negotiable. For anyadditional chores, a child can earn extra allowance. For example, a child may be expected to make the bed, set the table, foldclothes, and take out the garbage. For extra money, parents might agree to pay two dollars for scrubbing out the bathtub or five dollarsfor washing the windows.

4. Should I require my kids to save some of their allowance? Many family experts say it is better not to force children to save moneyfrom their allowance. Saving should be encouraged, but the point of an allowance is for kids, not adults, to manage the money.

http://www.eduguide.org/Parents/Library/Detail/tabid/304/id/1714/Parents-Discipline-Differently.aspx


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If an allowance amount is set based on a child having something to save and no saving is happening, consider after a set periodinforming the child that since the money is not going to the intended cause, that the allowance amount will be lowered. However, treadcarefully and dont institute this consequence for one or two missed weeks, but only if the behavior is consistent.

5. How can I set up my child for success? Review your childs allowance on a regular basisat least once a year. Determinewhether the childs needs and costs have changed.

Dont rescue your children when they make money mistakes. Rather help them figure out a solution. Explain that having and spendingmoney is a privilege and that responsibility is part of the package.

For teenagers, consider giving a monthly allowance so that they can learn to budget money over longer periods of time. You may wish

to set up a separate allowance for some items such as clothing or gifts. Make it clear that your teen will then have to keep track of themoney to pay for each item assigned.



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Due to the dynamic nature of our quizzes, they are only available on the web. Follow the addresses below to take a quiz on our website.

Is My Kid's Allowance Working?

http://www.eduguide.org/Parents/TakeQuiz/tabid/114/quizId/43/view/StepTakeQuiz/Default.aspx

Am I Paying the Right Amount for My Kid's Allowance?

http://www.eduguide.org/Parents/TakeQuiz/tabid/114/quizId/44/view/StepTakeQuiz/Default.aspx
http://www.eduguide.org/Parents/TakeQuiz/tabid/114/quizId/44/view/StepTakeQuiz/Default.aspxhttp://www.eduguide.org/Parents/TakeQuiz/tabid/114/quizId/43/view/StepTakeQuiz/Default.aspx

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