Starting an allowance
We started a task list to get ourselves organized and for my daughter to help me share the work load around house. Then, one day, she said that one of her classmates got an allowance for doing chores and she used it to buy candy. I asked if she wanted an allowance so she can buy things as well. She was ecstatic; so was I. I could also use the opportunity to explore math and money management! So, I think it was accidental that the concept of chores and allowance became linked.
Keep in mind that for us, the allowance wasn’t an exchange for helping with household chores. Chores will have to be done whether an allowance is paid or not. The task list was only used for us to keep track and it gave her a sense of accomplishment when something got checked off. However, tying the two together adds a dimension of value exchange – it’s not entirely different from the concept of you earning a salary or a wage. But be careful about associating chores for money at this age. If my daughter forgets to make her bed or feed her pet fish, she doesn’t get punished and allowance is not withheld. You’d have to figure out what works for you as the responsibilities can vary. You can do a fixed amount or a graduated formula that reflects their age: 50¢ for age 5, 60¢ for age 6, etc.
The allowance wasn’t an exchange for helping with household chores; chores will have to be done whether an allowance is paid or not. And if my daughter forgets to make her bed or feed her pet fish, she doesn’t get punished and allowance is not withheld. At this age, there is no request to borrow against the allowance to warrant a discussion of credit and interest, but this is a good time to talk about governance and oversight of money matters.
What we started with was 25¢ for doing the items on the task list that she had helped put together. In a two week span, she can earn about $2. For a 6 year-old, there is nothing she needs to buy for herself, so the money is really a currency for her to exchange for things at her school’s store or the occasional bake sale. When the cost of a pencil is 10¢, she can pay for them with nickels and dimes. On one occasion, she bought a pencil for her friend, too. There aren’t that many bake sales at school and there are only so many things a 6 year-old can get excited over in the school store. Eventually, the idea of buying things from school got old but she does ask about buying things at variety stores and such.
When you choose to start an allowance and how much to give is purely your decision based on your financial comfort. And just because they’ve earned the money, it doesn’t mean they can exhaust the piggy bank and buy whatever they want when they want. Just like subsidies, her allowance should come with some governance and oversight. In fact, this is the time to help them learn to manage money. My daughter has two piggy banks and alternates putting quarters. One is marked for savings and the other is marked for spending. Right from the start, she’s used to the concept of saving a part of what she makes.
Again, at this age, there is nothing she needs to buy for herself that I or her mom do not provide so there has never been a request to borrow against the allowance, yet. When this happens, we can open up the discussion of credit and interest.