Allowance and Money Management Health Article

Allowance and Money Management

Money given to a child at some regular intervals, to use as the child chooses.

Parents differ in their opinions about giving allowances to their children. Some parents believe that they should provide for the material needs of their children. They think there is no reason a child should have to manage money until they are old enough to understand the working world and mature enough to make responsible purchases. Other parents feel that giving their children allowances is a good way to teach them about money and financial responsibility. If parents decide to give their children allowances, there are several methods of handling the issue. How much they receive, how often they receive it, what they may spend it on, and whether the children must "earn" their allowance by completing chores at home are all things for parents to consider.

Children younger than five are generally not mature enough to understand money management. A young child this age usually resists saving money, and will probably want to spend it right way. Older children, on the other hand, can take more responsibility for their money. As they learn math skills at school, they are more able to calculate expenses; they can begin to figure how much they need to save for a desired item, or how much they will have left over after making a purchase. The actual amount of allowance will vary widely from family to family, but one recent survey gives some national averages: six- to eight-year-olds receive on average $2.00 a week; 9- to 11-year-olds just over $4.00; 12- to 13-yearolds $5.82; 14- to 15-year-olds $9.68; and 16- to 17-yearolds $10.80. Some families will give close-in-age siblings the same amount of allowance, but general practice seems to be to give older children more money than younger children.

Saving money is a difficult concept for most children because it is difficult for them to be patient and imagine future wants. If a child wants to buy an item that costs more than his or her allowance, parents can be flexible in their options. They can allot the child some extra-allowance expenditures or help the child figure out how long it would take to save his or her allowance. Parents may offer to provide matching funds—contributing a dollar for every dollar the child saves.

Some parents devise a category system to help their children manage their allowances. The first category is short-term expenses—money the child may spend right away on whatever he or she wants. The second category is saving. Savings may be placed in a special jar, where its slow accumulation is visible. This money is used for items the child wants that cost more than the amount of the weekly allowance. The third category is charity—the church alms plate, or a local cause, for example—or gifts for family members. The parents may determine how a younger child's allowance should be divided among the three categories, or the budgeting may be left up to an older child.

Allowances for teenagers may be a sore topic for many parents. Some parents stop giving allowances to their teenagers at a certain age and encourage them to get a part-time job. Some families put teenagers in charge of all their own expenses, so that they learn to budget. Money can become a difficult issue between parents and children of any age, and learning to be flexible can help each member of the family become more financially responsible.

Books

Drew, Bonnie. MoneySkills: 101 Activities to Teach Your Child About Money. Hawthorne, NJ: Career Press, 1992.

Estess, Patricia Schiff, and Irving Barocas. Kids, Money and Values. Cincinnati, OH: Betterway Books, 1994.

Godfrey, Neale, with Tad Richards. A Penny Saved: Using Money to Teach Your Child the Way the World Works. New York: Simon & Schuster, 1995.

Weinstein, Grace W. Children and Money: A Parents' Guide. Rev. ed. New York: New American Library, 1985.

Periodicals

Marcus, Mary Brophy. "Start 'em Young: Kids and Money." U.S. News & World Report, March 24, 1997, vol. 122, no. 11, p. 66.

Kramer, Pamela S. "Children and Cash." Woman's Day, February 1, 1997, vol. 60, no. 5, pp. 46+.

Bodnar, Janet. '"Dr. T' Tackles Some Toughies: Got Questions About Kids and Money? Dr. Tightwad Has the Answers." Kiplinger's Personal Finance Magazine, June 1996, vol. 50, no. 6, pp. 85+.

Cazzin, Julie. "Kids, Cash and Capitalism." Maclean's, May 6, 1996, vol. 109, no. 19, p. 40.

—A. Woodward