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TIPS
A Regular Allowance
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Andrea Nisley, Extension Educator
University of Nebraska Cooperative Extension
It’s time to begin a regular allowance when children are old enough to tell the difference between coins and when they begin to ask for money of their own.
Parents and children should decide together just what the allowance covers. The amount should cover their needs and include a little extra so not every penny is spoken for before they get it. That little extra will be what they use to practice decision making. Do they spend it on this thing or that - or do they save their allowance for something even bigger? If all of the allowance is spoken for, children have little opportunity to practice making choices.
The amount should be a fair share as it fits into the family’s total spending pattern. Remember that the cost of living for children increases as they get older; renegotiate their allowance "contract" occasionally.
At first, pay the allowance once a week depending on the child’s age and ability to deal with the concepts of both time and money. Always pay children on the same day. A regular income they can depend on encourages the development of realistic attitudes about money and personal finance in general.
Don’t pay for everyday chores or for good grades. Doing this encourages the attitude that everyone and everything has a price tag and that children should get paid for everything they do. Some things we do as part of our responsibility for being a family member.
Give them full responsibility for their allowance. Let them make their own decisions and their own mistakes. Learning to live with the results of a poor choice in spending money is a valuable lesson. A parents’ advice should be available at all times and may be required for some things, but remember the final decision is still the child’s. If they make a poor choice, avoid the temptation to say "I told you so." Cutting the purse strings can be as hard as cutting the apron strings.
Help them develop a simple plan for their spending. Encourage children to think of money to spend, money to save, and money to share. But remember, if they are saving and sharing (church for instance) as well as spending money, the amount of the allowance may need to be more than if the allowance is supposed to just cover expenses.
Any records kept should be simple and should be your child’s idea. It’s also easier to acquire the record-keeping habit while you are young and have less money to keep track of. Children will probably be ready to keep simple records of where money comes from and where it goes when they realize an allowance has a tendency to just slip away unless they do something to keep track of it and plan its use.
This week, help your child develop a simple plan for spending an allowance. Let us know how your child’s money management skills are coming along. Go to unlforfamilies.unl.edu, click on TIPS and tell us what you think.
Source: About Money and Children, NebGuide G93-1164-A.
