5 Rules for Giving Kids Allowance

Are you spoiling your child $5 at a time or creating the next financial superstar? This is the bottom line on rules for giving your kids allowance.

Hi, I'm Pilar Gerasimo with a Bottom Line Expert report on the ins and outs of giving your kids allowance or, as I like to think about it, giving your kids the tools to be financially independent. Joining me is contributing expert Tom Henske of Lenox Advisors in New York City.

Tom, what's the deal? Should we be giving their kids an allowance?

Absolutely, they should. Think about it. If you were sending your child to go play tennis or practice tennis, would you ever send them out to play without a racquet? Well, think about what you're doing. You're trying to teach your kids about money, and what are you trying to teach them? How to save, how to spend, invest and donate—and the way to do that is by putting money in their hands for them to go out and practice.

Cool! What is the right way to do it? How do you go about giving your kid the right type of allowance?

I like to give $1 for every year old they are, so if you have a six-year-old, he or she gets $6, if they're 10 years old they get $10. Give it to them once a week, usually on a Friday (seems to make sense), and then let them go and spend it on what they want.

Are there mistakes that people typically tend to make? What are the big pitfalls about allowance-giving?

The big pitfall is trying to control what your kids are spending money on. Remember, this is practice, so you want them to make mistakes with $200, as opposed to later in life making a mistake with $200,000. They get that by practicing. The second thing is don't hook it to chores. Make sure that when your children go to college, they still want to make their bed not just because they're getting paid. And then finally, don't use it as a disciplinary action. Don't yank the allowance away because they didn't act in a way you thought was appropriate, maybe in school or on the playground.

The bottom line on allowance—yes, give it. Definitely think about how you're using it to teach your kids about financial independence, which means don't tie it to chores or behavior. Don't micromanage them—let them spend it as they see fit, and think about the guideline of a dollar per year of age per week.

[Dani-ixcl]

I disagree: 1. Don't tie allowance to chores. 2. Amount of allowance $1 per year of age.

1- If you get a cleaning lady you would need to pay that person.
Pay children for general house chores.
As they age, they get more difficult chores -laundry, doing dishes, etc.; get paid more.
Do not give allowance for cleaning their OWN room -making their own bed; vacuuming, dusting, etc.; their own room is their house.

2. Amount of allowance NOT by year of age but by chore/work done.
a) real world work you don't get paid by age.
b) every chore is different. If a child is willing to do a bigger job, then should be compensated more. AND it will encourage other siblings to step it up.
Also, if have more children, different ages... get my point?

Personal comment- this parent interviewed has a lot more wealth than the average parent.
We cannot/should not 'give' but have children 'earn' what they are provided.
As adults we make many mistakes as parents -believe me, we know only when looking back.
I noticed the better off parents indulge children in higher allowance. That child, will NOT learn the VALUE of money; learn to differentiate the value according to what it is, not according to how much money they get/have.
Otherwise, I appreciate this video. Thank you for sharing. :)

[strifeturtle]

My allowance is 0 dollars and if I don't do chores I get la chancla

[mayank_upadhyay_]

My parents didn't gave me any, it was very disappointing because everyone of my friends was getting but I wasn't, I wasn't allowed to participate in any event or function or have any toys because it cost money, after years of this my brain breaked and I became emotion less for my parents, everytime I remember that, my soul gets terrified, I don't love them or have any feelings for them, that's what they have made me. But I still fulfill my responsibilities for them.

I survived my childhood because of my lovely friends ❤️🥰 otherwise I would have probably committed suicide.

[lucyscholes]

Ha I don't agree with any f this but I'm showing it to my mom so it might convince her

[alexthegamerxd]

I get 15 dollars every month, and no I’m not spoiled.

[gracem]

I don't do chores but get £15 a week

[axe]

I NEED MONEYZ AND IM ONLY 10 I KNOW HOW MONEY WORKZ