Q: I have two children ages 7 and 9, in the first and third grade, respectively. We haven’t given them allowance yet, but would like to start. How do we decide how much and when? Should it be tied to chores?
A: Your children are old enough for an allowance. In our household, we start allowances at the beginning of first grade, after they’ve had some instruction in money. We also raise the allowance at the start of every school year.
How much depends on a number of factors: how much disposable income you have and what you want your kids to do with the money. If this is for a teenager, I’d recommend a higher allowance; for a first grader, a dollar or less a week should suffice. Some financial experts say you should give your child a dollar a week times their age (7 years old = $7 weekly), but I think that might be too much for an elementary-school age child.
We start the allowance at 50 cents a week, then raise it a quarter each year. So my fourth grader receives $1.25, while my third grader gets $1. The kindergartner and preschooler have no allowance yet.
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Don’t tie the allowance to chores—chores are what the child does because he’s part of the family. You don’t get paid for your chores, and neither should he.
But don’t just give the allowance to your child. You should require a few things of him.
- Give the allowance on the same day each week (like Saturday, for example).
- The child cannot borrow against next week’s allowance—you are not a bank or a credit card.
- Require your child to save some of the allowance and give some away each week.
Having an allowance is a great way to help your child gain an understanding about money, one you can build upon as the child grows older and the allowance grows larger.
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