At the age of 4 or 5, my kids have started getting an allowance. The age here has been right when my kids have shown some kind of responsibility in taking care of money. For example, Marco and Isabella started getting allowance at around 4 years of age. They would keep their money in their piggy banks and I wouldn't worry about it getting lost. Anthony, on the other hand, got started on allowance on his 4th birthday and then I took it away. He kept misplacing his money, giving it away, and just wasn't mature enough to handle it responsibly. Now, however, at a couple of weeks short of 5, he has proven that he is ready and he will start getting an allowance once again.
My math for allowance is simple. $1.00 for each year of age. So a 10 year old would get $10, and a 5 year old would get $5.00. I have heard of other parents giving $.50 for each year. What is best for each child is really up to the parents and their financial situation. At a young age, I don't think it matters so much how much you give, rather than what they are learning from receiving an allowance.
Many also ask about bank accounts. When should kids get one? Our kids get their own bank accounts once they turn 6. It's like a birthday present for them. Dad takes them to the bank and they get to deposit all their saved money from piggy banks, plus a little extra gift from mom and dad. Turning 6 years old also comes with a right to learn how to pick and purchase stock. My DH helps the kids research a company and shows them the very basics. After that, their first stock purchase is on us!
It's great to get kids interested in money and how to be responsible with it. A great tool for kids learning about money, is this piggy bank. I first got this for Marco when he was 4 years old. It has 3 compartments: spend, give, save. We usually do the 10% donation, but to make things easy for our kids, $1.00 of their allowance automatically goes to church. The rest they get to divide between spending and saving money. Once their allowance hits the higher numbers, then the giving amount will increase.
Is your allowance tied to chores? For us...it's not. Chores are what you do because you are part of this family, because you share in this house, and because it's a way for the individual to contribute. Each child has their own daily chores to do, which they get nothing in return for. Allowance is also not based on grades or behavior. Good grades are a benefit to the student, so that should be reward enough. Good behavior is always expected as well, we don't use money to bribe it out of the kids. We do every effort not to attach any external value to money. Allowance, for our family, is a learning tool and a way to teach the kids financial responsibility.
How about earning extra money? I keep a list of things my kids can earn extra money for along with their pay. First I determined how much I was willing to pay them per hour. For me, it came out to be $5 an hour. After that I divided how much time it should take them to do the job by the hourly rate. Here are some example of how my kids can earn extra money. Keep in mind that these aren't available for them to do all the time.
- Raking the front yard, 30 minutes, $2.50
- Cleaning the kitchen (floors, counters, sink), 30 minutes, $2.50
- Cleaning extra bathrooms, 15 minutes each, $1.25
- Washing/cleaning van, 1 hour, $5
- Pulling weeds, 20 minutes, $1
- Babysitting little brother (I never keep the kids alone with the baby. This would include keeping him entertained while I'm preparing for company, showering, etc.), 20 minutes, $1
- Laundry helper, 15-30 minutes, $1.25-$2.50
At this point, only Marco and Isabella are really able to do these extra chores. Which is fine, since they are the ones who are the ones asking for extra things! But it is nice to see the kids sharing and learning together.
Last week, we went to Costco and Isabella took her purse. She figured she had $5 extra to spend. She did the math and bought each of the kids a smoothie! She's a sweetheart!! It's nice to see them learning how to save money, but also spend it...especially when it's done so unselfishly!
And just to leave you with something. Here is a clip that was a great lesson to my kids from the TV series Arthur. A great intro to saving, giving, and how getting everything you want can turn you into someone no one likes.