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Nov 16

Allowances – The Do’s and Don’ts

Need advice on the do’s and don’ts of dolling out cash to the kids? You have come to the right place. Here is your saving moneyguide to getting started:

Should I give an allowance? Yes. Learning to manage money is a critical life skill. The best way to learn to manage money is by having money. You want to teach them from an early age that they should be saving (between 10 and 20%). Depending on your views, their savings should be for a rainy day as well as putting aside money to help others.

When should I start an allowance? There are different views on this with some parents starting as early as three year old kids but the average is about six years old.

How much to give? The rule of thumb is to give $1 x the age of the kid per week. So a six year old would get $6 per week. But it also depends on where you live and your circumstances. You want to give them enough money so they actually buy things and therefore make decisions.

Should I tie it to chores or behaviour? Again, there are different views on this but many would say that you should not use allowance to punish kids for bad behaviour. Many also believe that allowances should not be tied to chores as kids such contribute to family chores (without payment). Further, you will quickly find that each additional thing you ask them will become a negotiation over cash.

Should there be rules to spending the allowance? Probably. If you have rules about what games kids are allowed to play, music they are allowed to listen and movies they are allowed to see, these should not be thrown out the window now that your kids can pay themselves. But this should be balanced by giving kids some control over how they spend as making bad decisions on poor purchases is an important part of the learning process.

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