Are five- and six-year-olds ready to manage an allowance?
It’s confusing. What’s the right age to start an allowance? How much should I give? Should it be tied to specific chores or behavior? To get the scoop, we spoke with our parenting expert and bestselling author, Alyson Schafer, and financial expert, award-winning journalist and television personality, Alison Griffiths. Here’s what they had to say.
How do you explain the concept of an allowance to five- and six-year-olds?
AS: Keep it simple and relevant. When your child is pestering you to buy something, try saying this: “Instead of me buying that for you, how would you like to buy it for yourself? You could have an allowance and then you’d be able to buy that on your own! Wouldn’t that be awesome? Let’s talk about writing up a budget and getting you started!”
AG: What is most important about starting an allowance is that it’s the beginning of a lifelong process of making choices about money and where it goes.
For this age group, I like to follow a beloved grade school tradition: Show & Tell. It starts with Show. Say you decide to give your five-year-old $5 a week. Go with your child when she is ready to spend it so you can Show her what her allowance can buy. This is where the Tell part comes in. Ask her questions like, “What would you like to spend your allowance on this week?” “Do you have enough to buy that Barbie outfit?” “You know, if you wait until next week, you will have enough.”
How much should they get?
AS: Start small. Just a couple of dollars, but based on a budget of what they are expected to buy with the money: $1.19 for sugarless gum plus $2.00 juice from the vending machine after swim lessons makes a $3.20 dollar allowance and spending budget.
AG: Some people like to go by age. So a five-year-old would get $5 a week. However, a better route is to first examine your disposable income and figure out what’s affordable. Then, you need to factor in your philosophy about how the money will be used. If you want your child to start saving at this age – which I recommend – consider giving the kids a larger allowance than if the money is intended for routine spending.
Should an allowance be tied to specific chores? What about behavior?
AS: No! I don’t like either of those ideas. Kids should do chores because they need to be done, and when you live in a community, it’s expected that everyone help out to the best of his/her ability.
Paying kids to behave will only create animosity and it sets them up for failure. Children should get an allowance because it’s a requirement of living that parents are responsible to provide, no different from food, shelter, and clothing. Children need to learn to manage money just as they need to learn to cook and clean.
AG: Whether or not chores should be attached to an allowance is a very individual decision. My opinion is that an allowance can work very well if there are chores that the kids do weekly, after which they are given their money.
So, rather than offering a weekly allowance in exchange for daily chores (such as putting away the dishes) make it a weekly chore that’s directly tied to the giving of the allowance. At this age, it should be something fun, like gathering up the recycling or raking leaves with one of the parents.
Should a parent try to influence how a child spends allowance money?
AS: Sort of. I think kids should draw up a budget on how they plan to spend their allowance. Parents can then approve or veto the budget. Suppose you have a no-soda pop-in-the-house rule and your daughter’s budget includes $1.00 for a soda. You can veto that purchase. However, it’s her choice if she has budgeted $5.00 for toys and decides to buy a cheap toy that will break in five seconds (or is just like the other 200 toys she has at home).
AG: Grit your teeth and let them spend! The main thing at this age is not the actual spending, it’s the trio of discussion, choice, and decision.
You can point out an item of better quality, but don’t be dismayed if your child is drawn to the gaudy alternative (many adults do the same thing)!
AS: You can also talk about setting aside a portion of the allowance for charitable giving, a habit you may want to encourage your children to cultivate.
Any tips on how to use an allowance to introduce the concept of saving?
AS: Remember to teach within the context of the child’s interests. For example, if your son wants to buy an $8 toy but has only allocated $2 for toys in his allowance budget, don’t give him a lecture on the importance of setting goals, and having patience. Just say, “You can get that toy if you save up four more allowances!”
AG: Whether you are five or 45, saving is great but it only works when there is a goal attached. A 30-year-old can focus on a goal that’s 15 or 20 years away – a five-year-old can’t. Help her set goals that can be achieved within a couple of weeks or months.