An allowance can teach a child many valuable lessons. But money can be a mixed blessing, so it's important to settle on an appropriate amount before doling out dollars. Consider the following factors when giving your child an allowance.
The Child's Age.
In a poll conducted by BabyCenter, the most common age for starting an allowance was 4 years old. Some children that young may show an interest in putting money in a piggybank and counting it up until there's enough to buy what they want. But if they don't understand the concept of saving their own money to buy something in particular, they may not be ready. With some kids, 9 or 10 may be the appropriate age.
No matter when you start, increase the weekly amount as the child grows older. One recommendation is to calculate 50 cents per year, meaning a 6-year-old would receive $3 a week. Choosing a formula like this can eliminate confusion about how much to give, and siblings can't argue about getting more or less.
Your Family Income.
Of course, what suits one family may not suit yours. Try working your children's allowance into your monthly budget to assess whether the sum is realistic. As your kids get older, include them in the discussion about how much they will receive. For example, if you hit a rough patch because you run into an unexpected expense, be honest with them about it and explain how and why it will affect their allowance that week.
An allowance also need not be handed out weekly. If your family relies heavily on a commission-based job, for example, or your income changes month to month, try giving your child an allowance once a month, or in whatever frequency makes sense for your financial situation.
Where You Live.
Kids talk, and there's a good chance your child knows exactly how much the neighborhood kids and their friends at school receive each week as an allowance. If you're comfortable approaching other parents, it may help to talk to them and find out whether your allocation is totally off base (especially compared with your child's closest friend).
Needs vs. Wants.
Think about how you expect your child to use the allowance. If it is intended to be spent on "extras," such as toys or video games, then a lesser amount is certainly acceptable. If, as they get older, you want them to use their allowance for necessities such as new school clothes or supplies, a greater amount would be more appropriate. Consider what you will chip in and adjust the allowance accordingly.
Extra Earning Opportunities.
Decide if you want to give your child a chance to earn extra money on top of what you hand out regularly. For example, if your 7-year-old gets an allowance of $3.50 each week, does that include the expectation that he or she will complete certain chores? Will you pay more for picking up toys or cleaning off the table after dinner? If $6 a week doesn't seem like enough for a 12-year-old, consider supplementing that amount with task-related payouts for duties such as doing laundry or walking the dog, which can simultaneously instill a sense of responsibility. You might want to base the amount on the level of effort required for various duties.