According to data released this month from personal finance comparison site Finder.com, more than half of parents (53%) with kids under 21 give them an allowance. The survey of 2,000 adults finds that the average amount given is $16.98 a week, and about 14% of parents say they don’t require their kids to do a chore to get the cash. But experts say that’s not such a good idea, and here’s what they recommend instead:
- Tying allowance to chores helps kids learn about money - The earlier children learn basic financial principles like the exchange of goods and services for money, the better it is, says financial investigator Pamela Yellen. It’s good for kids to have things to do around the house that they don’t get paid for, but the allowance can be for doing more than the required minimum tasks.
- Start ‘em young - Experts advise giving your kiddos an allowance starting around four or five years old, or around the time they start asking about and understanding the concept of money. For the little ones, getting cash can teach them about different denominations and how many coins it takes to make $1. And when they’re a little older, you can teach them about how to divide their money into what to save, what to spend, and what to give to charity.
- So how much should you give? - Some say that the amount you give is less important and the idea is to get kids used to handling and talking about money. But if you’re looking for a rough guideline, Mike Falco, founder of Falco Wealth Management notes many parents he works with give a dollar per week for each year old their child is. So an eight-year-old would have a maximum allowance of $8 a week, if they did all the required chores to earn it.