It is advised that while your kids are still younger you should put them through some practices that will help them grow good habits.
While there are so many reasons why you should give your kids allowances, it can be confusing as to what age to start. What age to stop giving allowances? How much allowance should you give your kids?
Giving kids allowances can be the best way to teach them financial skills, and you can start as earlier as when they are four years old. The best method for deciding how much to give your kids is based on the $1 for 1year, e.g., $12 for 12 years old weekly.
On average, parents start giving their children allowance at age of 5. Most parents start giving around $3 to $5 per week to 5-6 year olds, $6-$8 to 7-9 year olds, $10 to 10-11 year olds, and $15 to 13-17 year olds.
Teaching your kids that allowances are earned through doing chores is not the best practice. The best time to stop giving allowances is when your kid gets and sustains a job.
Giving allowance to your kids teaches them a lot about responsibility and finances. It also teaches them the consequences of their actions and poor financial decisions.
According to research, the average of allowances across most families is around $10 weekly.
However, whether the allowance you give your kids is above or below the average, the lessons they learn from managing their own money are more important than the amount.
They include the responsibility and tasks you think or know that your kids will be engaging with, will they manage a side hustle?
The allowance amount you give to your kids is entirely up to you, but whatever amount of allowance, make sure that you take the opportunity to give your kids financial lessons along the way so they can benefit from good habits for the rest of their lives.
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When to Start Giving Allowances
While some people start giving their kids allowances at a predetermined age, it’s not ideal as some kids mature in reasoning faster than other kids. Therefore, the best time to start giving your kid allowance is as soon as they start having a sense of the value of money.
Hence, some 4 year olds will be ready to learn how to manage money while older 7 year olds will find it hard to grasp the concept of money and manage it.
Generally, most kids start to get the idea of the value of money at 4-5 years, and by elementary school, almost all kids should be ready to be given allowances.
To tell whether your kids are getting a sense of money, try to know when they begin to understand that money is necessary to buy things they want. Even though at this time, the child might not have a complete idea of the different values of paper currencies, it is good to start at this time.
When to Stop Giving Allowances
Even though many parents keep giving their kids allowances year upon year, it is not ideal. That said, there is no laid down rule, age, or time to stop giving allowances to your kid.
It is entirely up to you to decide, but there is some certain time when it is best to do so.
On average, most parents stop giving their children after they turn 18, and the best time is around when they graduate from high school. This will push them to join the workforce and find a job to explore their finances with the experience and lessons learned from managing allowance over the years.
Most 18+ year old teenagers have experienced some type of part time job. At this time, your kid is considered an adult, and it is ideal that they join the workforce and become financially independent and not rely on your income.
Another group of people thinks the best time to stop giving your kids allowances is when they graduate from college. It is believed that kids should take their time in college seriously and study effortlessly.
After college, they get a good job; earning and practicing the financial lessons leant during school and the allowance period.
The best time that a larger percentage of parents have chosen over the years, and the overall best time to stop giving their kids Allowances is when they get a job.
When your kids take on the job for some time; they know that it is time for you to stop the Allowances. If you are not comfortable with stopping the Allowances, know that you are doing it for the best of your kid.
Continuously giving allowance to your child who is 18+ is an act of “enabling” them. This is very damaging to your child and will hinder them from success and achievements in their future.
For them to grow to be able to manage themselves, their finances and build a greater financial responsibility, they need to be independent.
Average Allowance by Age Group
A key rule in setting kids’ allowance by their age is to understand that the different ages come with different responsibilities.
And those responsibilities affect the Allowances they need. For Allowances by ages, you should match the year the years with $1. A 4 years gets $4, 6 years old $6, etc., weekly.
However, go the different age groups, you could use the following to efficiently to their allowances and get the best out of the process.
Allowance for Age Group 5 or 6
It is usually at this time that your kids start to get some sense of the money of money even though some kids might earlier. You can start by giving them $3 to $5 per week.
At this age period, it is highly recommended you start giving allowances. As the age tend to differ among kids, you don’t have to force giving allowance and money management upon your kid.
While this entirely depends on your income and your child’s responsibility to try out, the age group Allowances should be between $3 – $5 per week. You should not expect any savings from your kid at this age. They are yet to start to learn the basics of savings and money management.
Allowance for Age Group 7 to 9
At this age, it is recommended that you start teaching your kids financial skills. You can also give them extra cash for extra tasks they do to educate them on the idea of getting a job such as a summer job.
While it is good to give them Allowances, experts suggest that you do not tie bad behavior, chores, and punishment with allowances, making it a disciplinary tool and not a means for financial education.
The recommended allowance for children between the ages of 7-9 is between $6- $8 per week. Your kids have gotten to have a sense of money and would like to purchase their things.
They should also be able to solve their immediate needs without your help.
Your child should have gotten good knowledge of some basic financial education, including having some savings. After about six months of allowance, your kid should at least save about $50 -$100 on savings.
Allowance for Age Group 10 to 11
It is recommended that you start educating your kid with various aspects of financial education and make sure that they gain good financial skills.
The recommended allowance for them at this age should be between $9 -$11 per week. At this age, they should start to be good at managing and practice some of the financial skills you teach them along the way.
Your kid within this age group should at least have a saving of up to $200 or more.
Make sure to imbibe the concepts of budgeting, savings, among others. You can also let go of one or two non-essential needs and give the responsibility over to them.
This is to let your kid have some responsibility to deal with. Such things might include comic books, snacks, iTunes downloads, etc. You should know that child’s responsibility for any discretionary spending is growing just as he or she is.
While it is okay to allow your kid to make their own choices, you should know that giving your kid more money when she lavishes her allowances betrays the idea of her learning to manage money.
Allowance for Age 13 and Up
By this time, your kid should be used to the basics of finances, and it is recommended that you give them an allowance between $13 and up based on the 1y ear, $1 formula.
This age group is well mature and is getting into adolescence.
Your kid is up for a little bit of real-world financing; it is recommended that you open a prepaid debit card that your kid can manage online. Multiple financial services allow you to open an account with your child’s name.
You can send the weekly allowance to your kid’s card. Your child can get up to date information on their savings, purchase online, and even withdraw cash from the ATM.
The savings amount of each kid at this age varies. Your kid could spend a summer and have $1000 in saving while another kid could fund a side hustle with their allowance and have $2000 in their savings.
Financial Skills to Teach by Age Group
Financial skills let kids understand how that world works and that earning a living comes from hard work. Giving Allowances creates an opportunity for parents to teach their kids about a lot, including working for a living, money management savings, etc.
Educating your kids and letting them get financial skills such as money management has no specific time; therefore, you can start as soon as possible.
Such good exposure to financial skills at an early point in life lays the foundation of a successful financial future and career in disciplines that are finance inclined and ultimately in life.
By teaching financial skills, you can also get great experiences out of a dull moment.
While there are so many financial skills to learn, some of the basics that you should teach your kid through giving Allowances to the different age group include the following;
Financial Skills to Teach Ages 5-6
While giving allowances to this entry age group, you should teach the basics of money such as;
- The differences between the value and appearance of different bills and coins.
- The idea of putting money aside to meet needs later.
- The value of working to earn money.
- Knowing the difference between their needs and wants.
Financial Skills to Teach Ages 7–12
After getting the very basics, when your kid gets to this age group, you should introduce them to some concept of finance that will help them develop financial skills, such as;
- Money management, the idea of having savings and allowance spending.
- How to track their purchases.
- How they could overcome impulse buying.
- Shopping around to compare prices.
- Budgeting. (how to make and stick to them)
Financial Skills to Teach Ages 13–17
At this stage, you could have your teen kid practice the financial skills you have been teaching them. At this point, you open up the complex financial concepts and teach them harder skills. These other skills include,
- How to make both short and long term financial goals.
- Managing debt.
- Protecting their selves against financial identity theft.
- The use of online financial services and tools
- Saving towards a specific goal.
- Understanding the wise use of credit.
- How to manage money earned through work such as a side hustle or summer jobs.
Pros & Cons of Chores in Exchange for an Allowance
Giving your kids allowance is a great way to give them financial education and help them sort out their immediate needs independently. It is best not to use your kids’ allowance as a form of earning or payment for the chores they do.
Chores are a way of them helping out in the house. It would help if you didn’t give or make your kid think that the allowance is their compensation for their chores. Instead, make them understand it is a responsibility.
Even though using the allowance as payment for chores or good behavior might get some good results initially. Eventually, it may lead to some bad experiences and impacts.
To understand its impacts, we list here the pros and cons of using the allowance as payment or earning from doing chores.
- Earning allowance as payment for chores will act as an incentive to get the kids to do their chores without question.
- It teaches the kids hard work and that they gave work hard to earn money.
- They will get to understand the relationship between work and play.
- Your kids may also think up ways of working smarter and faster to earn more money, thereby becoming more creative.
- They will not have a sense of entitlement; they will understand that they will have to work to earn.
- They also spend money wisely as they will associate the money with all the time they put in to earn it.
- Your kids doing chores for money will teach them that working isn’t always fun.
- They will begin to be open to requests for everything they will do in the house.
- Your kids may and will eventually decide not to do chores will they don’t need the allowance or when they think they have enough savings.
- Earning allowance for chores Betrays the idea of financial education, and your kids will get to learn no financial skills.
- It undermines the idea of working together as a family and having some family time.
There are different reasons for giving allowances to your kids, and in this article, we have listed them out, including the various recommend weekly Allowance s for different age groups.
We have also suggested that you create a scenario where your allowance to your kid is seen as a reward for the chores done.
As a last tip, we suggest that you use other opportunities that involve money, such as bill payment, to teach your kid financial skills, and in the future, you will be happy you did.