Piggybank on It
Whatever your decision, your child's sex shouldn't have anything to do with the dollar amount of the allowance. Boys and girls should be paid the same (and statistics show that they generally are).
There's no one dollar amount that's appropriate for all kids. The amount you decide on should be sufficient to provide your child with some extra money so he'll learn how to handle it. There's no educational benefit in setting an allowance at an amount at which it's already decided how it will be spent before it's even received.
Many factors go into fixing an allowance. The four main ones are listed here:
- Your child's age. Obviously, the older your child, the bigger the allowance (up to a certain point, at which your child may become too old for an allowance).
- Your family income. Only you know how much your family can afford to allocate to allowances.
- Where you live. Maybe keeping up with the Joneses isn't high on your list of priorities and you frequently tell your child, “I don't care that Jimmy Jones has this or does that.” But, realistically, the neighborhood you live in can certainly influence how much allowance you give your child. What your child's best friend receives may not be a deciding factor, but it's a factor nonetheless.
- What the allowance is supposed to cover. If you expect your teenager to buy all his own clothing from his allowance, then the dollars paid to him each week must be sufficient to allow for this extensive purchase. If you supplement an allowance with spending money, then a less generous allowance may be in order.
Watch Your Step
Forget what you got as a kid—that's out of date. Today, a key rule of thumb in setting allowances is paying a dollar a year: Pay $1 for each year of your child's age. Under this scenario, your 8-year-old would get $8, while your 12-year-old would receive $12. Adjust this general rule for other factors (your family finances or other issues).
Piggybank on It
You may not need to continue increasing a child's allowance when they reach their teens. At that age, you may expect them to supplement their allowance with their own earnings, whether baby-sitting or other after school jobs. If they ask for more money from you, suggest that they go out and earn it.
Your Child's Age
Young children should get a smaller allowance than older children. While some families give the same allowance to all their kids even though they're of different ages, this isn't the usual approach. Most give more money as to their older kids than younger ones.
Using a rule of thumb to set an allowance is only a starting point. An allowance of $1 per week may be okay for a 10-year-old, but $15 may not be enough for a 15-year-old. You need to make some realistic judgments about what the allowance will buy.
As your child gets older, you'll have to adjust the allowance. Part of this adjustment is simply because of added age. Because your child is older, she must pay for more things and needs more money to do it. For example, being at college means that your child has to pay for many of the things you used to buy when she was at home, such as toiletries and the newspaper. Of course, inflation also puts pressure on you to increase allowances so that your child's buying power isn't eroded.
What if your children are of different ages? Generally, you'll want to give them an allowance appropriate to their age. If they're close in age—say, two years or less apart—maybe you'll give the same amount. A child may complain that it's not fair that her older brother gets more than she does. Fairness doesn't mean that everything has to be equal, though: It's fair to base allowance on several factors, with age being an important one.
Your Family Income
Your head and your heart may want to pay a generous allowance, but your family's limited resources may dictate otherwise. You have to be realistic about what you can afford to pay as an allowance.
If you can't afford to pay an allowance or set it at the amount you really think appropriate, be honest about it. Explain that family finances prevent you from giving your child the amount you'd prefer.
You can bet that the kids who live in the real Beverly Hills 90210 don't receive the same allowances as the kids in most inner-cities. You may feel that this is really just another way of saying that a family's income should influence the allowance. But there's more at work: There's peer pressure to get the same allowance that the other kids do.
Of course, you can take your neighborhood into account when fixing your child's allowance, or you might decide that this element shouldn't be factored in. It's your call.