by Joan Inong

Created on: June 16, 2009

The amount of allowance that kids should receive has always been subject to debate. But, one thing is certain: if children receive any allowance, they should learn the value of that allowance. If not, then giving them any allowance at all is worthless.

Many factors will determine how much allowance your kids should get. But, one of the most determining factors is age. Young children should never get more than $10 a week. As the child gets older, his or her allowance will increase in small increments (perhaps $20 a week by the time they reach high school). If you immediately start out by giving $20 a week, which is more than what the child is able to spend in one week anyway, you will signal to the child that it is okay to be given that much money without having done a thing.

Likewise, your children should also do something as a return on their allowance. For instance, children who have to complete certain chores every weekend should and usually do receive allowances. Allowances, therefore, are much like wages. However, for those who only need an allowance for "lunch money," the allowance should not be much higher than what is needed to eat lunch five days a week.

Your financial situation should also determine how much allowance your children get. If your child asks about the amount of allowance he or she is receiving, explain to him or her clearly what your financial situation is. You don't have to get into much detail, but perhaps you should say it in a short and concise manner, such as: "We can't afford to give you more than that right now."

Also, allowances should teach children how to handle money. So, if your children are doing their chores and receiving an allowance of $20 a week, encourage them to save at least $5 a week. Each month, they will be able to save $20, and each year, if they put that money into a savings account, they will be able to save $240. If you start doing this when they are 8 years old up to the time they turn 18 years old, they will hopefully have saved up $2,400. That will be a nice sum to have if your child decides to go to college or buy a car. Imagine $4,800 saved up if your child decided to save $10 a week! Write up those figures with your child to really emphasize the importance of saving.

The most important thing to remember, however, is to always tell your child the value of saving money. Not only is frugality a useful asset, but it also helps shape a wise and careful adult.

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