Allowances for Kids

Allowances can also teach a preteen the value of money. Once your child has money from an allowance, you can teach him about budgeting, saving for big-ticket items and planning for the future.

But how much do you give for an allowance? And for what reasons? Here are some tips that might help you figure out how you want to deal with an allowance for your child.

Earned or given? Once you decide to give your kid an allowance, the controversy becomes whether it should be earned or just given to a child to be used for extras, like trading cards, nail polish or even snacks at the movies. This decision will ultimately be up to you and your partner. Remember, if you choose to have your kid earn an allowance, it will be up to you to follow up on the tasks he or she is doing to earn it.

What are the tasks? The tasks your child does to earn his allowance should be decided by both of you together and put in writing. Some tasks should help the family as a whole (taking out the garbage) and others should benefit your child as an individual (folding his/her own laundry).

How much should a child get for allowance? That really depends on the child's age. A kid can get by with $5 a week if the allowance is only to be used for extras and savings. If you and your child think the allowance should be used for recreational activities such as movie tickets, then the allowance could be more. As a child gets older, the amount of money you give for an allowance might increase. If the allowance is based on chores, increase the responsibilities as you increase the allowance. If you're not sure how much is a reasonable amount, ask other parents in your neighborhood how much they give their child for allowance and what their child needs to do to get the allowance. You have to honor the going rate!

Sometimes an allowance has to be adjusted. If your child is going on a school trip or needs a costume for a school play and the allowance money is expected to cover the costs, consider giving an advance or offering a bonus for additional work.

Teaching your child to save. If you're interested in teaching your kid about savings, you might mandate that a certain amount of their allowance gets put into savings. Go to the bank with your preteen to set up a savings account and share the monthly statement with your child to show them how the money grows with interest. The monthly statement will also show you and your child how much he is spending from the savings. (Seeing a significant chunk come out of their account for a pair of jeans might make them think twice next time about just how desperately they need them!)

Teaching your child to give. Some parents require their child to give a small portion of allowance to charity. Even if it is 50 cents a week put into a charity box at home, at the end of the year, your child can make a donation to the charity of her choice. This helps teach your child about philanthropy and how it can be incorporated into her life, even in small ways.