How Much Allowance Should You Give Your Child?
We believe an allowance is critical to teaching your child how to be smart about their money. Of course the big question is, just how much should you give them?
The answer depends on a lot of things, but primarily how much you can afford and what things cost where you live. Here's a good rule of thumb: Give enough allowance for your child to be able to buy a few candy bars or a toy without having to hoard for weeks, but not so much that they're able to buy every new video game the minute it hits the store.
Here is our Suggested Weekly Allowance, according to your child's age:
Age |
Allowance |
6 - 8 |
$3 |
9 - 11 |
$4 |
12 - 13 |
$8 |
14 - 15 |
$15 |
16 - 19 |
$30 |
Don't you wish you could get a raise just for getting older?
Seriously, though, talk with your child about how much allowance you'll be paying - and what that money must cover. It's okay to include enough money so your child pays for school lunches and Scout dues from his or her allowance, but be sure to include a discretionary sum, too. Cash that she can use any way she wants is the real learning tool.
Review your child's allowance once a year to keep it in line with changing needs and costs. (Meanwhile, don't bail her out if she overspends.) Gradually give your child a larger allowance and a freer rein on spending.
The early teens are a good time to switch from a weekly allowance to a monthly one so your teen will learn to budget money over longer periods of time. You should also increase the allowance to allow him to cover most, or all, of his clothing costs and entertainment expenses.
Dolan Straight Talk Tip: Help your child save a portion of his or her allowance. Start by opening a bank account in your child's name. Ask your bank about special accounts for young savers. These accounts usually waive fees and minimum-balance requirements, and you will probably have to cosign to open the account. It's well worth it. Watching interest build up on his or her savings is a great way for a child to learn the power of compounding.
Above all else, don't set narrow rules on how your child should spend his allowance. Let your child make the decisions - and the mistakes. Your child's early experience with managing money will teach unforgettable lessons.
Want to learn more about raising a money-savvy family? Check out these articles:
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Child Savings AccountsWhen opening a savings account for your child, make sure their Social Security number is used as the account's tax identification number. That way, as long as your child is under age 14, interest earned will be taxed at your child's lower tax rate, not at your tax rate. This rule holds true as long as your child earns less than $1,300 a year in interest. |
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