My daughter asked me the other day, “What will I do with all the money I have in the bank?”
I answered, “You can use it to buy your first car.” Alright, it’s hard to think about your first car when you’re 12 right? However, I was trying to teach her the value of setting long-term goals and compound interest.
I think she gets it. I think. After all, the money came from doing extra chores around the house. Some were birthday and Christmas money from family and friends. When she was about 10, I promised to match her savings dollar per dollar, hoping to motivate her to save more. It looks like it’s working.
However, experts are divided and friends have their own opinions about giving kids an allowance, when to start it and if it should be chore-based or not.
Some say kindergarten or first grade is a good age to start, when they can tell the difference between coins and bills. Simplify it though. One parent said that he started his kids in their last year of pre-school wth $3 a week. His kids were told they could spend $1 on anything they want. The other dollar had to be placed in a piggy bank while the last dollar had to be set aside for church or charity.
Three dollars may not be much for some families, or may be a lot for some. It all depends on how much leeway you have in your household budget. Others also like to go by this rule of thumb: a dollar for every year of age, per week, so $5 by kindergarten age. There are no hard and fast rules. The important thing to remember is to not wait till middle school or high school to teach kids about money.
Again, it’s a personal choice. Some families prefer to give kids an allowance based on chores done. I’m in the middle. I believe that there are certain chores that children should be doing routinely, based on their ages. Examples are making the bed every morning, taking out the bathroom trash, loading/unloading the dishwasher and feeding pets. If my daughter goes over and beyond her daily chores, then I’ll bump up her allowance for that week. An example of a non-daily chore is cleaning her bathroom or dusting shelves. Some families even post extra chores on the fridge with corresponding monetary values.
Whatever amount you decide on at whatever age, just aim for consistency. Decide whether summer and winter breaks are included. Decide whether birthday gifts to friends are included. Or new outfits. Sticking with a plan or agreement sends a message to your child how much you value money in your family. It also makes expectations clear. At a young age, they learn to equate money with reward and hard work, and hopefully apply these money skills to adulthood.