a specific sum of money given to a child on a regular basis to cover certain personal expenses.
money received for jobs besides a child’s regular chores, either at home or away from home. It is the child’s “paycheck.”
work done at home on a regular basis as part of the responsibility of being a family member.
a present, usually for a special occasion such as a birthday or graduation.
money you give to your child to cover an immediate expense, whether it is bubble gum or gas money.
Where do your children get their money? Most children get money from allowances, hand-outs, cash gifts and/or earnings. Earning money is a valuable experience that should be encouraged, as long as it does not take too much of a child’s time. But children can’t earn enough to support themselves, and their earnings are often irregular.
An allowance gives youngsters a chance to manage money and practice living within a regular income as if they had a job.
This experience is most nearly like the adult world they will move into all too quickly.
Some parents feel that they really can’t afford an allowance for their children. It sounds like one more expense added to the budget.
But it doesn’t have to be an extra expense – in fact, it may save you money.
A good way to start is to keep a record of how much money you give your child in a typical week and what it goes for – school supplies and lunches, movies, ball games, concerts, magazines, video games, sports equipment, minor clothing items, grooming aids or cosmetics, snacks and so on. This is the amount that you’re already spending for your child, over and above the basic needs like food, shelter and clothing.
Try giving this same amount as an allowance, instead of in unpredictable handouts. It’s not extra money going out of the family budget – it would have been spent anyway. But now the children will be learning how to manage money. With a regular income, instead of unpredictable handouts, they can learn to plan ahead for spending and saving.
For an allowance to work, parents and children must know what expenses it is supposed to cover. You may want to make a list of these expenses. Talk about how to handle overspending and other problems that may arise.
Some parents think of an allowance as a “wage” for the chores that children do around the house or yard. But if children think they must be paid for every bit of work they do, they don’t learn much about the responsibility of being a family member. By giving them regular chores to do without payment, you teach them to accept their responsibilities and give them the good feeling of being a productive part of the family.
In the same way, children have a right to some share of the family income just by being members of the family. You give them part of that share by paying for their basic food, clothing and housing, and maybe other things like music lessons or participation in sports. If you give them another part of their share in the form of an allowance – an allowance that they don’t have to “earn” by doing their chores – you can be teaching them good money sense at the same time.
Keeping chores and allowance separate also helps you avoid the potential problem of the-sticker and-stars syndrome coined by parent educator, Barbara Coloroso. She suggests that children can become used to doing chores for an allowance. They may refuse to do chores when they no longer need the money. Youth may also demand a higher and higher price to do the same chore.
Earning money – either at home or at an outside job – lets children add to their allowances and at the same time develop a good attitude toward work.
For extra money, offer children the chance to do extra work around the house (besides their regular chores). Think of jobs that you might hire outside help for – such as weeding the garden, cleaning the garage, shoveling snow, cleaning leaves from the roof, babysitting, mowing the lawn, etc. – and instead, hire your children.
The job should be something the child can really do. Don’t give children jobs that are too hard for them. Agree on the amount of payment before the work begins. If your child is capable of doing the job and wants to do it, pay what you would for outside help – provided that the work gets done reasonably well. Overpayment only gives the child a false idea of what it takes to earn money.
As children get older, they may want to look for work outside the home. Before children accept a job, be sure they understand the responsibility it carries. Be sure they have enough time for fun, sleep, study, school activities and family responsibilities. Youngsters’ school work may suffer if they work too many hours. Fourteen to 20 hours per week of outside work is the maximum that most teens can handle.
Earnings mean taxes. Teenagers with outside jobs need to understand how income tax works – why taxes are assessed, what they are used for, what withholding means and so on.
A job can help your child understand money in terms of time, skill and effort. Perhaps your child never thought about the relationship of a hamburger to an hour’s worth of babysitting or grass cutting.
Beginning with the first allowance and continuing as long as the child receives one:
Koehler, C., Crites, A., Behal, P., and Horton, S.,, 2006, Money Sense for your Children - Where Money Comes From, Extension | University of Nevada, Reno, FS-06-94
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