Allowance is a contentious topic. Some people believe that it is essential for children to learn how to manage money, while others think that it just encourages them to spend unnecessarily. This blog post will explore the advantages of allowance for kids, and will also look at some of the potential disadvantages. We will also highlight some tips on making sure that your child manages their money responsibly.
Related: The average allowance by age
The advantages and disadvantages of allowances for kids:
- Pro #1: It teaches children about the value of money.
- Pro #2: It can help children to learn about saving.
- Pro #3: It can teach children how to budget effectively.
- Pro #4: It can give children a sense of responsibility and independence.
- Con #1: It can lead to children spending unnecessarily.
- Con #2: It can create a sense of entitlement in children.
- Con #3: It can be used as a tool for bribery by parents.
- Con #4: It can cause arguments if children do not receive the same amount of pocket money as their friends.
Should children get an allowance?
There are key arguments for and against giving allowance to your child. On one hand, some people believe that allowance is essential for children to learn how to manage money. This is particularly true if they are given an allowance that they have to use to cover specific expenses, such as buying lunch at school or going to the movies with friends. This can teach them the value of money and how to budget effectively.
On the other hand, some people argue that allowance is unnecessary and encourages children to spend it unnecessarily. They believe that children should only be given money when they need it, such as for buying school supplies or paying for extracurricular activities.
So, what is the right answer? The truth is, it depends on your individual situation and what you believe is best for your child. Here are a few tips to help you make the decision:
- Talk to your children about money and how it works. This will help them understand why they are receiving an allowance and how they should use it.
- Set clear rules about what the money can be used for. This will help your children to stay within budget and not spend impulsively.
- Help your children to save their money. This can teach them the value of delayed gratification and how to save for a specific goal.
- Monitor how your children are spending their money. This will help you to ensure that they are using it responsibly and not wasting it on unnecessary things.
There are many reasons why allowance should be earned. But, ultimately, whether or not you give your children allowance is up to you.
When should kids start getting an allowance?
This is another area where there is no clear right or wrong. Some parents choose to give their children allowance from a very young age, while others wait until they are older. There are pros and cons to both approaches.
Giving an allowance to younger children can help them to learn about money management at an early age. It's important to set clear rules about how the money can be spent. Otherwise, children may not learn anything from having an allowance.
Waiting until children are older to give them allowance can help to teach them about responsibility. They will need to save up for specific items or activities and may even have to work for their money. But, this approach can also be more difficult to manage, as older children may be more likely to spend impulsively.
Whatever you decide, make sure that you talk to your child about money management and set clear rules about spending. This will help them to spend their money wisely.
In the US, allowance is usually paid on a Friday (34%) or Saturday (24%), according to the Youth Economy Report. The amount that children receive varies but, on average, 7-year-old children earn $5.06 per week.
What are the pros of giving a child an allowance?
There are a few reasons why pocket money is beneficial:
- It can teach children about the value of money: If children are given a set amount of allowance each week, they will learn that they need to budget and make their money last.
- It can help children to learn about saving: If children are encouraged to save their allowance, it can teach them the value of delayed gratification and how to save for a specific goal.
- It can teach children how to budget effectively: If children are given an allowance that they have to use to cover specific expenses, such as buying lunch at school or going to the movies with friends, it can teach them how to budget effectively.
- It can give children a sense of responsibility and independence: If children are given an allowance in exchange for completing chores or helping around the house, it can give them a sense of responsibility. Being able to make their own spending decisions will reinforce this, too.
So, if you are looking for a way to teach your children about money management, an allowance is a good option. It can also help them to learn the value of delayed gratification and save up for things that they want.
Related: Benefits of giving an allowance
Are there any cons to giving a child an allowance?
While there are advantages to giving children an allowance, there are also a few potential disadvantages:
- It can encourage them to spend unnecessarily: If children are given an allowance without any guidance on how to spend it, they may waste it on unnecessary things.
- It can create a sense of entitlement: If children are given an allowance without having to work for it, they may develop a sense of entitlement.
- It can lead to arguments if children are not given the same amount of money as their friends: If children are given an allowance that is not in line with what their friends receive, it can lead to arguments and feelings of jealousy.
- It can be used as a tool for bribery by parents: If parents use allowance as a tool for bribery, it can backfire. For example, if your child isn't eating their vegetables, you may be tempted to give them extra allowance as a reward. But, this can teach them that they can get what they want by not eating their vegetables.
This means that it is important to weigh up the pros and cons of allowance before making a decision. If you decide that it’s right for your family, make sure to set clear rules about how the money can be spent. This will help your children to use their money wisely.
Should I just give my child allowance or make them earn it?
If you give your child an allowance, they will learn about money management and budgeting. But, if you expect them to earn their allowance, they will learn that hard work pays off. You should also keep in mind that there are many ways to reward your child.
A good option can be to adopt a mix of both approaches. For example, you could give them a small amount of allowance each week and then top it up if they do extra chores around the house. Apart from other benefits of giving kids chores, this will teach them both the value of money and the importance of hard work.
Related: Should you give your kids an allowance for doing chores
How much allowance should I give?
According to the Youth Economy Report, at the age of 7, children get an average of $5.06 per week, while 18-year-olds get an average of $16.34 per week. Overall, in the US, the average amount of weekly allowance is $10.48.
Of course, the amount of allowance to give your child depends on your individual situation. You may want to give your child a smaller amount of allowance each week, or a larger sum to give them each month, or once they reach a specific milestone (e.g. completing their school year). Alternatively, you could focus more on chores.
How should I give my kids allowance?
Now you know the pros and cons of giving your child an allowance, you can consider how to give it to them. With GoHenry, you can give your child their allowance in a way that is convenient for you and them. You can choose to send them money and set paid chores, which can be managed with the GoHenry app. When used with their GoHenry prepaid debit card, this means that they will always have access to their money – and be able to check their balance before they spend.
You can also use your parent logins to keep track of how much allowance your child is receiving and how they are spending it. This can help you to ensure that they are using their money wisely. The GoHenry benefits don't stop there - your child will also benefit from in-app Money Missions. These are interactive games and quizzes designed to accelerate your child’s financial education, as well as the ability to set savings, add spending limits and rules, and receive notifications when your child spends money using their GoHenry card.
Find out more on how you can give your child their allowance with a GoHenry debit card.
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