While some parents may think that it is not a good idea to give children money at a young age, financial experts actually believe that it could be a good start to teach them about how money works and introduce them to money management. It will help them understand dollars and cents, and actually apply what they learned about Math and Finance into real-life situations. So, whether giving children money is a good idea or not is out of the question.
The real question parents have to deal with, and often struggled with, is – how much?
Well, the fact of the matter is that there is NO specific dollar amount that is appropriate for all children. But the amount you decide on should provide your child some extra money (but not too much) so that he/she will learn how to handle it. You can take into consideration the following factor in fixing your kid’s allowance.
Your Child’s Age
While some families give equal allowance to all their children regardless of ages, this is not the usual approach. Normally, young kids get smaller allowance than the older ones because they have fewer needs. An allowance of $1 per week may be ok for 9-year-old, but a $10 may not be enough for a 15-year-old, especially considering the requirements at school.
You can use this rule of thumb as a starting point. Give your children an allowance appropriate to their age, while taking into consideration to their needs, or rather the things they will buy.
Your Family Income
As much as you would want to be generous to your children, you have to be realistic with what you can afford to give them for allowance.
If you cannot afford to provide them an amount which you really think is appropriate, be honest about it and explain to your kids the family finances in order to avoid resentment.
Your Neighborhood, City or Town
You can bet that those living in the suburbs have lower allowance than those living in the inner cities. Yes, particularly because the cost of living in the latter is a little more expended than that of in the outlying district.