What The Experts Say
Most experts agree that a child should be given $1 per week for each year he or she is old. For example, an eight year old would receive $8 per week while a ten year old would receive $10 per week. However, the experts also agree that a child's allowance should be based on more than just one factor and that the advice above is simply a starting point or rule of thumb and does not need to be followed literally. The experts also agree that one of the most important factors in how much a child receives for allowance is what you want them to spend it on. The child should receive enough money to cover the normal expenses that they pay for (like lunch money) as well as have some discretionary money left over. This discretionary money will teach them the concepts of managing money, saving and financial planning.
Regardless of what the experts say, the fact is that you know your child best and you are the best judge of what they need for an allowance in order to learn the financial concepts that you think are important as a parent. When deciding whether your eight year old should receive $3 per week or $20 per week, consider these factors in your decision.
- Look at what you expect them to purchase during the week. For example, if you expect their allowance money to cover school lunches as well as toys and other discretionary items, be sure that you provide enough for those needs. Also, be sure to adjust as the needs change. For example, if the price of school lunches changes, adjust the allowance amount to cover that.
- Consider your household finances, it makes no sense to offer your child an allowance that you simply cannot afford. If you want to pay your child $10 per week, but you cannot afford that in your budget, explain that to the child. This will help them appreciate that you also have to worry about money and that they will not always get everything they want. However, even if your budget is tight, try to provide something as an allowance (even if it is only a couple dollars), so that they can have money of their own to learn with.
Image Source and Reference
Dollar Coin. (Supplied by the US Mint; Public Domain; https://upload.wikimedia.org/wikipedia/commons/8/87/LineartPresRev.png)