Many parents wrestle with the issue of allowance.

• Should I give them one? I already buy them what they need.
• If I do, what should I expect them to buy with their money?
• How much should I give them?
• Should it be linked to chores?

This article is for parents who have decided it would be a good idea, but aren’t yet sure what they want to do. Here are a few things to consider when adopting an allowance plan:

1. This isn’t about spending more money – it’s about teaching. Think of allowance as shifting spending from you to your children. Since they now make the decision, THEY make the value judgement instead of you. They get outstanding, daily learning that life is about “making choices”.
2. Don’t be afraid to let your kids make mistakes. It’s best they learn these lessons as kids when the price of a mistake is pretty low.
3. Create a mini-budget or some other set of rules to make it clear what Mom and Dad buy versus what your kids buy, and be consistent!
4. Use the system to pass on values such as saving for long-term goals and giving to charity.
5. By age 10, consider a modest clothing allowance (eg allow your child to choose/buy his t-shirts), further growing this portion of the allowance as he/she ages.
6. Decide whether you want to link allowance to chores. There will be more on this subject in a future entry. There’s no one right answer, no matter what the “experts” might say, but we have learned that this issue ranks way up there – along with politics and religion – for generating sanctimonious debate!
7. 50¢ or $1 times their age is a formula often used that sounds scientific, but is really arbitrary, teaches little and is not connected to anything in the real world. On the other hand, more complex approaches often die young because they’re too difficult to sustain (despite initial enthusiasm).Be sure that whatever approach you adopt, it’s sustainable. (We – ahem – provide tools to make a thoughtful system easy to do.)