Allowance for kids – whether that’s money given to your child outright, earned through chores, etc. – is a great opportunity for your child to start learning lots of different money lessons. Let's discuss kid's allowances – what you don't know.
Allowance for kids is a hotly debated topic among parents.
Should I just give my child an allowance, and how much, exactly? Should allowance be tied to chores, and WHICH chores…because I don’t get paid to do the dishes every day?
Let’s set aside which system is the “right” one (whatever that means), and instead focus on 5 things you didn’t know that could really make a difference in how you’re doing your OWN system.
Allowance Surprise #1: There is no one “right” allowance system or model.
I’m going to just put this out there, right off the bat. Because let’s be real – despite what the gurus think is the ONE answer for every single child, and despite how many articles on allowance jars you see out there, you and I both know that children are different.
What may work for one child, or a group of children, will not work for others. And after researching the allowance landscape for a few months, I can honestly say there are convincing arguments for each side of the allowance vs. chore commissions divide.
So, we all need to stop swinging mud at one another and start looking at the tweaks that can be made to any Kid Money System (what I call the system for how money gets into your child’s hand – it’s a bit more than that, but we’ll leave it there for now) to make it tailor-made for your family.
Ready to see how your OWN allowance system/Kid Money System is working? Click below for a free score sheet.
Allowance Surprise #2: Giving Children an Allowance is NOT a Money Lesson
Sounds crazy, right? I mean of course it seems that if your kid gets some money into their hands and gets to make a few decisions with it, that they’re bound to learn money lessons.
But according to the research done by one man, who looked at over 50 allowance studies over the years, the money lessons don’t occur JUST from handing your child over money.
Pssst: by the way, that is the case for both if your child has to earn the money through some sort of chore system, or if they are given the money through an allowance system.
Nope. They occur in the follow-up (i.e., in the money conversations + expectations that you attach with the money you’re giving your child).
Allowance Surprise #3: If you want your kid to get a similar allowance to your childhood amount, then you need to adjust for inflation.
Do you fondly think back on the allowance you used to get/earn in your own childhood? You might also get to thinking, “my kid should get the same amount I did.”
That’s all grand and good. BUT, you need to remember a little money concept called inflation.
In other words, the $5/week that I used to get when I was 9 years old? It couldn’t buy today what it used to buy back then because products and services naturally increase their prices over time.
There’s a simple tool here you can use to plug in your old allowance figures and see what it would be in today’s dollars.
For example, my $5 allowance I used to get back in 1992 would be about $9 in today’s money.
Pssst: try not to do TOO much emotional adjustment with this one, as the numbers don’t lie.
Allowance Surprise #4: You might want to start earlier than you thought.
But guess what? If they don’t actually get a consistent amount of money at that age via your Kid Money System…then you’re missing out on a critical money stage.
Pssst: is your child over 5 or 6 years of age and you’re now wondering if you missed out? I’m not into scaremongering; you can definitely still teach your child what you’d like them to know, starting from any age. In fact, statistics show that the majority of parents who give an allowance start at around the age of 8.
Allowance Surprise #5: You should keep your eyes on your own paper.
Many parents look to other parents to see how much they’re paying their kids. But here’s the thing: the amount you pay your child has several variables involved to figure out, one of them being what money responsibilities you are now passing onto your child to pay for.
10-year-old Liam’s parents might be giving him $20/week in allowance but expect him to pay his lunch bill out of this amount. And if you give your child $20/week from overhearing this from his mother, but haven’t passed on the same money responsibility to your own child, then your child would be getting a lot more than Liam to burn through.
It’s best to get a range idea of what others are receiving, then ultimately come to your own conclusion once you figure out the money responsibilities your own child will have to meet with the money.
I’m hosting a 48-hour Kid Money System Makeover Challenge (free), where we’ll get down to the details of setting up your own, tailor-made, allowance system capable of being tweaked over the years as your child ages and their needs change. How about you join us? Click below to sign-up + get your free score sheet to see where your own Kid Money System currently stands.