Do you give your children an allowance? Do they have to complete certain chores to get it?
These are interesting questions and ones that come up quite frequently in my own circle of friends who have children. When and how you should start giving your child an allowance and whether or not you tie that allowance to chores is as individual as the kids themselves. There is no one formula that will work for every kid or every family.
A recent survey of 2,000 parents nationwide found that the vast majority of parents — 89 percent of them — assign chores to their children. Only 51 percent though, give their kids an allowance. And among the allowance payers, just 21 percent tied the payouts to chores. Forty-seven percent of parents indicated that they provide allowance as a way to teach their kids how to handle money, but not in connection with chores. Most unpaid kids don't go unrewarded though. Additional computer or TV time were listed as popular non-monetary rewards for chore completion.
If you're considering assigning chores and/or paying your kids an allowance, here are a few tips to get you started:
Start 'em young. The sooner you help your kids understand the value of a dollar the better. My youngest starting getting an allowance when she was 5. Granted, it's not much, but it's enough to give her a sense of what things cost and what she can afford.
Picking pay. To decide how much money to give your kids, experts suggest thinking about how much your child might reasonably spend in a week on items that you are okay with her purchasing but don't wish to pay for. For little kids, think small toys or candy; for bigger kids think computer games, music and clothes.
Managing the dough. Don't just hand over a wad of cash each week and expect your kids to know how much to spend on frivolous stuff and how much to sock away for larger purchases. Help your kids set financial goals by splitting up their allowance into two or three allotments. Both of my girls put a portion of their allowance into the bank for savings, a portion into an envelope that will go to charity, and the remainder in their wallets for day-to-day spending.
Walk the walk. The best way to teach kids how to manage their own money is to help them understand how you manage yours. If a kid is old enough for an allowance, he is old enough to know how much you are socking away for summer vacation or how much the groceries cost each week (and why purchasing the latest DS game would eat away at your other funds.)