Alberta Money Management: Allowance FAQs

Posted by: Krista McDonald on 12/12/2011

As your children get older, you may be considering giving them an allowance. This is one way to help kids learn to manage money while giving them some spending cash at the same time. If you would like to start implementing allowances in your home but are unsure of where to start, these tips will help:

Why should I give my children an allowance?

While allowances are definitely not mandatory, there are a number of benefits associated with giving your children an allowance if it fits within your budget. A few of these include:

• Helps children learn money management skills at an early age. Children learn how to save, spend, and budget their money for things they want.

 

• Prevent future problems. It’s better for children to learn and make mistakes about money when they are younger. Adults with money management problems often find themselves in the midst of financial problems such as excessive debt, withdrawn accounts or even Alberta bankruptcy court.

 

• Gives kids a feeling of independence as they save and spend their own money.

 

 

Overall, allowances are a good way to introduce children to money.

 When is a good age to start giving an allowance?

 There is no set age as to when allowances should begin, but many experts believe 4 or 5 is a good age to start. At this point, kids can count their own money and many already have an idea of the things they’d like to purchase with it.

How much should I give?

A dollar for every year of age, weekly, is a good benchmark. However, this amount may need to increase as kids get older and their spending habits change. For example, if you want your kids to use their allowances towards lunch money so they can learn how to budget, then be sure you give them enough to cover that cost.

Should my children have to earn their allowance?

There are mixed reviews about whether or not you should make your children do chores for the family. Some believe that it helps young children see the value of earning money, and allowance without work can lead kids to believe they are entitled to money from their parents.

On the other hand, when children are given an allowance for helping around the house, it may take away the lessons learned from doing chores simply because they are part of a family, including responsibility around the house and a sense of duty towards their family members.

Whichever you choose, it’s important to weigh the pros and cons of each.

Should I dictate how children spend their allowance?

 If you tell your kids exactly what to do with every penny of their allowance, it defeats the purpose of learning money management. However, it’s not a bad idea to require them to set aside a certain percentage for saving. This will help kids learn the importance of having money set aside.

Allowances can be a great tool to help children learn how to spend and save their money wisely.