Topic —  Financial Advice, Parenting Solutions

The Allowance Question: How Much and When?

May 16, 2011
Alyson Schafer

Pocket

Your daughter begs you to buy her a sweater. What do you say? 
Your son announces he’s lost another lunch bag at school. What do you do?

For parents who give their children an allowance, the answer is easy, but figuring out how to handle the allowance situation just seems to generate more questions than it answers!

From my work with parents, I can tell you the three most frequently asked questions I hear regarding allowances along with the answers to help you get on your way.

1. What age should I start giving my child an allowance?

There is no right or perfect age. You can’t get it ‘wrong’ per se, but my rule of thumb is start as soon as possible. Be sure, however, to keep the allowance age appropriate. One of the very first skills children need to learn about is recognizing and naming coins. A preschooler is capable of this. If the coins are from their piggy bank, and the reason they are counting the coins is to see if they have enough to buy something, the learning is more dynamic, contextual, meaningful and empowering. 


2. How much should their allowance be?

You decide. Pay attention and see if there is something you routinely purchase on your child’s behalf already, like providing money to go to the movies or cash for a pizza lunch at school. Make these items the starting point for the child’s first allowance, knowing that you can tweak it along the way. In my family, I was already regularly giving my children money for the church collection basket and delving into my wallet for change to buy juice from the vending machine after their Saturday swim lessons. I made these two items the basis of their first preschool allowance. Handling these transactions independently with their own money provided small, but valuable lessons. When they wanted a bigger allowance, I asked them to present me with a budget to justify any increases.  (I nixed the request for $3 for candy, but approved the $5 for Scholastic books.)


3. Should allowance be tied to chores?

I say a resounding NO! Children do chores because they are required to carry their weight in the family. It’s a team—all for one and one for all. You get an allowance as a way of learning money skills and developing responsible money habits. If your children refuse to help around the house, you need to find a discipline tactic other than bribery to hold them accountable and motivate them.

*Alyson sits on BMO’s SmartSteps for Parents team of experts that created an interactive site for families to help parents teach financial literacy.