We know that money conversations with adult family members can get tense sometimes, but what about with your children? Influenced by your upbringing, you and your partner likely have varying views on how to talk to kids about money. We are all about having fun when learning about money, and we often play games when we visit schools or various groups to teach people about managing their finances.
We also believe in starting them young. It’s important to help kids understand that money really doesn’t grow on trees, and that just like for kids, it takes times for adults to earn money over time too. What better way to teach kids about money and keep the conversation going from childhood through adolescence and into adulthood than by establishing an allowance for your kids. Read on to learn what to consider when starting to give an allowance.
Just as parenting methods and philosophies vary, so do allowance methods. Here are a few common ones to consider:
- Fixed: This is a non-variable way to give money to your kids. It means that there is no trade-off or expectation for chores to be complete. You establish the amount you want to give your kids each week and they get it no matter what.
- Task-based: Like it sounds, a task-based allowance method puts chores and good behavior at the center of an allowance. The more chores they complete, the more they can earn. And if the chores are not finished, an allowance is not given.
- Random: This one doesn’t have a structure and no expectations set for earning money. It ebbs and flows, allowing the parents to decide when to provide an allowance, rather than tying money to responsibilities.
- A mix: While the three above are common approaches and some follow them to a T, others find a combination of methods works best for their family. Maybe it’s a fixed amount per week with the ability to earn more if more chores are completed.
How much should kids get for an allowance?
Once you’ve decided which allowance method you’ll use with your family, next you need to determine how much your kids should get and how often. The basic rule of thumb is to start with an age-based allowance, which is typically a weekly allowance of a dollar for each year of age. So, if you have a 5-year-old and an 8-year-old, they would receive a base allowance of $5 and $8 per week, respectively. Depending on the type of allowance method you follow, they could also earn more for additional chores. Additional allowance may vary, with some chores (like cleaning up the yard after the family pet) paying more than others.
Benefits of giving kids an allowance
Giving an allowance to your kids opens the doors to talk about money. Share with your kids the things your family spends money on, how financial decisions are made, what you’re saving for, what they’re saving for and more.
Verve is passionate about serving our members with energy and enthusiasm to help them take care of their finances. One of the things we never get tired of is teaching the kids (and adults!) in our communities about money. We believe the more people know about finances and managing their money, the better their lives will be, and in turn, the stronger our communities will be.
Whether it’s a game of “Jeopardy!” with high school seniors about the types of financial institutions, accounts and student loans, a tour of one of our branches for a youth group, a class presentation on credit scores, a virtual presentation to a seniors group on how to keep your financial information safe online, a hands-on checkbook balancing workshop for elementary students or a piggy-bank building workshop, we love finding creative ways to teach others about money.
Looking for more tips for talking to your family about money? Check out more of our family finances blog posts.