How much allowances/ pocket money do you give your kids and when do you give it?
Having allowances is an opportunity for kids to learn about financial responsibility and money management. It is a great way to teach them independence, patience, charity, and gratitude. Allocating allowances for kids is a significant step in the process of growing up.
So how much should they get? As a guide, give them RM1 per year of age every week – a 10 year-old will get RM10 per week. But this is personal and depends on your financial situation. The idea is to increase the amount appropriately as they grow up, according to their needs. This amount should cover more than the basics (e.g. lunch and bus fare) so they can save. Hence, it is important to discuss how you expect your kid to spend the money.
You can start giving them allowances as early as preschool or primary school, to spend at the canteen or the stationery shop. Starting from young is important, as letting them handle cash will teach them to distinguish the value of different bills and coins,and dealing with transactions help them enhance their mathematic ability.
There are different approaches to allotting allowances. It can be given on a regular basis depending on your preference. You can start giving allowances daily when they are young, and switch to weekly or monthly as they grow older and learn to handle larger amounts of money.
A regular allowance will be easier for them to plan their budget.
Allowances can also be given based on needs. Your kids will have to ask you whenever they run out of money. Discuss their request and teach them about the differences between wants and needs, as well as appropriate budget strategies. If they want to buy something that costs more than their allocated budget, they have to save up and put aside immediate wants, thereby teaching them self- control.
Learn to earn
When talking about chores and allowances, one opinion states that kids have to earn their allowances by doing chores, and another says kids are expected to be responsible for chores without being paid.
Linking chores to allowances can teach them to work to get what they want, but they may ditch the chores if they do not feel the need for extra money. On the other hand, separating chores and allowances can teach them to be responsible as a family member, but they may take the allowance for granted if they do not have to work for it.
As a solution, separate regular allowances and chores (e.g. throwing out trash, washing the dishes, etc.), and offer to pay them extra for doing additional chores that are bigger and tougher (e.g. washing the car), as long as the chores are suitable for their age. After all, doing household chores teaches them life skills and to be responsible without expecting rewards.
Allowances: a handy guide
- Help them budget. Teach them to allocate how much they are going to spend for immediate purchases and how much to set aside for savings.
- Let them spend, but set a limit. Do not micro- manage how they spend their allowances, but step in if it breaks your rule, e.g. spending all their money on junk foods.
- Be firm with the allowance schedule. If they ask for an advance because their funds ran out, do not simply bail them out.
- Don’t punish by cutting allowances. If they misbehave, take away their privileges instead, such as limiting TV or internet access.
- Practise what you preach. Your financial habit will influence your kids. If you usually overspend on unnecessary things, they will think that it is an acceptable behaviour.
Different parents may have different preferences of giving allowances. But one thing is certain, financial education should start from young, and letting kids manage their own money is a good way to start.