There are a lot of opposing views on when is the right time to start giving your young one an allowance. Some say when a child exhibits an interest in money and begins to understand it is the time to start. Others say children aren’t ready before they are 10 years old.
Here are some things to consider when considering giving your child an allowance.
Decide what your child can/should spend money on- With this new found income, what can your child use their money for? Clothing? Financing outings like going to the movies? Might be a good idea to continue covering the essentials and provide them with some guidelines on using allowance for discretionary spending.
Encourage your kids to use the3-3-3 rule when it comes their allowance. Spend 1/3, save 1/3, and put 1/3 aside for a specific big-ticket item. This way, your child is learning early that all the money that comes to them has to be divided equally to ensure they are getting what they want but also saving for what can come up later down the road.
Pick an age appropriate amount – Even though the cost of living has increased since you were their age, giving your children too much money without a proven track record of them making good decisions is a recipe for disaster. Some experts suggest starting out with $1 per year that your child has been alive as a starting point.