You might be surprised to know that American parents aren’t going all-in on the allowance as they did in the past. Far from it, actually. A recent survey commissioned by CredCards.com revealed that only 4 out of 10 children under 18 receive one. While the current financial crisis may have contributed to this trend, it’s clear that many US parents choose not to give their kids pocket money per week. However, this is a mistake. Many experts feel that an allowance is crucial for teaching kids about money. If you have children, you should consider giving them a small amount of money each week.
Related Articles in this blog:
- 10 Tips for Household Money Management
- Explain Money to Children, 11 Reasons Why it is Useful
- How Young is Too Young to Understand Money?
- Money Lessons for Kids? Values, Saving, Spending and Giving
- 10 Mistakes Parents Make in Teaching Kids about Money
But first, let’s establish why an allowance will have a positive impact on your children.
Table of Contents
Why Pocket Money for Kids is Important
There are several reasons why you should give your kids pocket money: Many experts and we believe that pocket money is an essential part of learning about personal finance. Giving your kids a regular allowance will help them to understand the value of money and how to budget it effectively. There are several reasons why you should give your children pocket money:
Money Management
The most important one is that it will teach them how to manage money. Even if you hand out cash without any strings attached, your kids will still need to learn how to budget their spending. If they want to save up for something special, they’ll have to figure out how.
This is an essential skill that they’ll need later in life. So, it’s best to start them off early.
Self-Reliance
Another reason why pocket money is necessary is to teach kids how to be self-reliant. If they want something, they’ll have to save up for it and buy it themselves. This will instill a strong work ethic in them and make them less reliant on their parents.
Of course, you’ll still need to provide for their basic needs. But, if they want extras like toys or clothes, they’ll have to earn money themselves.
Family Spending
Pocket money can also help your children feel that they’re essential members of your household. By giving them a small amount of money each week, you’re showing them that their opinions matter and that they can contribute to the family finances.
This is especially important for older kids who are starting to become more independent.
Should Kids be Expected to Earn Pocket Money
Now that we’ve established why pocket money is essential, you might be wondering if kids should be expected to earn it. After all, if they’re already getting an allowance, why make them work for it?
Well, there are a couple of reasons why you might want to consider this option:
It Teaches Them the Value of Money
If you make your kids work for their pocket money, they’ll learn that money doesn’t grow on trees. They’ll have to put in the effort if they want to get paid, and that will teach them the value of money and instill a strong work ethic in them.
It Gives Them a Sense of Responsibility
Another reason you might want your kids to earn their pocket money is that it will give them a sense of responsibility. If they’re in charge of doing certain chores around the house, they’ll need to be diligent and get them done.
That will help them understand that there are consequences to their actions and that they need to be responsible for their behavior.
It Encourages Them to Save
Finally, if you make your kids earn their pocket money, they’ll be more likely to save it. They’ll know that they won’t get paid unless they do their chores, so they’ll be less likely to spend it all as soon as they get it.
At What Age Should You Give Your Kids Pocket Money
Now that we’ve established why you should give your kids an allowance, you might be wondering when you should start. The answer to this question depends on a few factors:
● Your Child’s Actual Age
The most important factor is your child’s age. If they’re still very young, they might not be able to handle the responsibility of an allowance. On the other hand, they might be ready for it if they’re a bit older.
You’ll need to use your judgment to decide when the right time is. But, as a general rule of thumb, you can start giving your kids an allowance when they’re around 4 or 5 years old.
● Your Child’s Maturity
Another factor to consider is your child’s maturity. Just because they’re a certain age doesn’t mean they’re ready for an allowance. Some kids are more responsible than others.
So, you’ll need to consider their personality when making your decision. If you think they can handle the responsibility, they’re probably ready for an allowance.
● Your Family’s Financial Situation
Finally, you’ll need to consider your family’s financial situation. If you’re struggling to make ends meet, you might not be able to afford to give your kids an allowance. On the other hand, if you’re doing well financially, you might be able to afford it.
You’ll need to use your best judgment to decide whether or not you can afford to give your kids an allowance.
How Much Money (At Each Age)
Now that we’ve established when you should start giving your kids an allowance, you might be wondering how much money you should give them. What’s the average amount country-wide? As the New York Times reports, the average allowance for kids in the United States is roughly $30 per week.
Of course, this number will vary depending on your family’s financial situation. Also, you can start small and reach that number after a few years. Here’s a general guideline for how much pocket money you should give your kids at each age. Why? It is clear and related with age, which reminds your kids they have more responsibility and proud to be a bigger kid.
Be Clear About Your Expectations and Restrictions
Once you’ve decided how much pocket money to give your kids, you’ll need to be clear about your expectations and restrictions. Pocket money is not a trade off for housework, but you may want to tell them that they need to do certain chores as part of their responsibilities (e.g. tide their own room). Or they need to put some of the money into a savings account for them. You must be clear about your expectations from the beginning. This will help your kids understand what they need to do to earn pocket money and what they can do by their pocket money.
Closing Thoughts
You have a complete guide to giving your kids an allowance. Remember to use your best judgment when deciding how much money to provide them with and what restrictions to place.
Many parents find it difficult to separate pocket money for kids at first. Once you do, and you begin to facilitate discussions about family spending and individual wishes. You’ll realize how pocket money can help in developing responsible kids.
About Me
Hi, there. I am Lin. Together with my husband and two kids, we live in the beautiful Netherlands in Europe. I am dedicated to self-development, creating quality time for the whole family, and fully supporting kids with their potentials with all I have learned from engineering, MBA, and 10+ years of working experience in the energy sector.
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