You’re in a tough spot. You want to feel independent and have your own spending money, but you’re too young for a job. What if you asked your parents for an allowance? And what if they said yes?! How would you react to that?
It would probably look a little something like this…
But don’t get too excited just yet, because most parents don’t just hand their kids money. It turns out that getting an allowance might take a little more convincing. Why? Because creating an allowance program is a big deal. It means that you’re responsible enough to start learning about money.
If you’re wondering how you can convince your parents to trust you with an allowance, we can help! First, we’ll go over why an allowance is good for kids. This is in case your parents need you to explain the benefits of this allowance that you’re proposing. Then, we’ll take a look at what allowance programs look like, so you and your parents can create your own. And then, we’ll discuss the elephant in the room: how much money you should get every week and how to come up with that number.
Ready to start working on your allowance program? Great! Let’s get to it!
Why You Need an Allowance
OK, OK…you caught us. The truth is that most kids don’t actually need an allowance. After all, you’re a child! You’re fortunate enough to have your needs covered, and most of the extras you want are just that: extras.
So, let’s start by understanding that an allowance is not a need; it is a want. So, when your parents ask, “Why do you need an allowance?” you can say, “I don’t need an allowance. I would like to have one, so I can start learning how to manage my money.”
Now that’s impressive! And super true. That’s why an allowance is an important part of your financial education. These are some of the benefits of having an allowance program.
It Teaches You How to Budget
Having money might sound like fun – and it is. But it’s also a responsibility.
When you receive money, the first thing that you realize is that it’s not unlimited. Say you get $20. The list of things you wanna buy with those $20 is probably endless: toys, snacks, clothes, shoes, video games, pets. You name it!
But can you actually buy all that for $20? Definitely not. That’s why receiving money forces you to think about how to use it. That’s called budgeting. And it’s a skill that you’ll pick up quickly when you get an allowance.
It Helps You Decide What’s Important
Since you can’t do it all with your $20, you’ll have to make some choices. Asking yourself some questions can help you decide how to spend your money:
- Of all the things on my list, are there any real needs? Needs include clothes, school supplies, medicine, or healthy food.
- Which ones are wants? Wants are typically things like toys, candy, puppies, or comics.
- What would I like to have now, and what could wait until later? Think about what would make you happiest.
- Are any of these items important to help me achieve other goals? For example, a basketball hoop isn’t a real need. But the extra training could definitely help you become captain of your team.
It Gets You in the Habit of Saving
Once you’ve decided what you really want to buy with your money, it’s time to look at the price tag. How much does the item cost? Can you afford it with the money you have now, or do you need to save up for it?
Chances are, you’ll need to save for at least some of the items you want to get with your money. This means you should come up with a plan to set some money aside every week until you have enough to buy that item you’re dreaming of. And you won’t believe how great it feels to reach your savings goals!
It’s a Great Way to Learn About Sharing
If you’re getting an allowance, it’s because you’re officially a big kid. But you may have a younger sibling who’s not old enough for an allowance. And when you go to the store, they might also want a small treat.
Having your own money is a great opportunity to share with others! Whether you choose to get your little brother a book or get canned items for your school’s food drive, this is an opportunity to use your money to bring a smile to someone else’s face.
How to Set Up a Good Allowance Program with Your Parents
If the conversation with your parents went well and they’re open to the idea of an allowance, it’s time to figure out how that’ll work. Many families consider allowances as a form of income for kids. Think of it as a salary that you earn.
In exchange for that salary, you need to spend the money responsibly. Wondering what that means? Well, it’s not the same thing for every person. This is where you need to chat and plan things out with your parents.
Many families split the kids’ allowance into three categories: savings, sharing, and spending. How you split it is up to you and your parents. The important part is to stick to the system and create goals around what you want your money to do for you. Some of these goals could include:
- Buying a new playset when you’ve accumulated $50 of spending money
- Reaching $100 in savings to contribute to your college account
- Setting $25 aside to donate to kids who are in the hospital
To help you keep track of your money and start planning how you’ll spend it, you can label and decorate three jars or boxes. These containers will help you divide your allowance every week and monitor your progress. Once you’ve reached your goal for each jar, it’s time to take the money out and put it to good use!
Your Allowance and Chores
Many parents give their kids an allowance if they get their chores done or do extra work around the house. Others prefer not to tie money to chores.
If your parents prefer to keep money and chores separate, it doesn’t mean you’re off the hook with home responsibilities. It just means that chores are non-negotiable and that everyone has to help out around the house.
How Much Should Your Allowance Be?
This is another one that varies from one family to another. An easy rule of thumb is for parents to give kids more or less $1 per year of age. But the final amount depends on your location, the cost of living in that area, and how much your parents can afford to provide. Just check out our kids’ allowance survey for more data.
When kids earn an allowance based on chores, each task may have a different dollar value. After all, giving your gecko water takes less effort than doing the laundry. If you get an allowance that’s tied to chores, your parents are the best person to decide how much each task is worth and how to keep track of the work done.
These tips also work for kids who already have an allowance! They’re a great way to figure out the right amount for you and the system that works for your family. Remember, your allowance isn’t set in stone. You can adjust and change things around to get the best results.
If you want to walk the walk, you have to talk the talk. And allowances are not the exception. That’s why we put together this list of allowance definitions with a few concepts that can help you better understand money:
- Asset: An item or resource that you own and paid for with your own money. Examples of assets include a home, stocks, or equipment.
- Compensation: Payment earned for completed work.
- Ledger: A book to record all your financial transactions and keep track of your balances.
- Opportunity Cost: When you want to buy different items but can only afford one, the value of the things you give up are the opportunity cost. People also refer to this as trade-off.
- Salary: The payment you earn for work or services, calculated as a weekly, biweekly, or monthly amount.
Books and Journals to Learn and Keep Track of Allowances
Did we already mention that allowances are a big responsibility? That’s because they are. Part of managing this allowance responsibly is keeping up with your learning. We rounded up the best books and journals for kids to make it easier for you. Check out our big kids’ money books page for more reading recommendations!
Want to keep track of your money and stay motivated to reach your goals? Get some help from the Cool Piggy Bank Ledger! It’s more than just a ledger, though. It’s a tracker with extra pages for you to make your calculations or write notes, plus “Financial” pages where you can do your planning. Got a birthday coming up and you’re expecting some dough? Plan how you’ll spend and save it with this hands-on book that takes your financial education to the next level.
To make the most of your money, you have to stay organized. Enter the Give, Spend, Save Cash Envelopes; the easiest way to keep your money in order. These clear pouches with strong zippers keep your cash protected, even if you accidentally spill water on them! But it’s more than a money storage system. It includes cards to explain more about each category and why they’re important.
Best for Budgeting
Make budgeting yummy with Pigs Will Be Pigs, a story about a pig family that’s splurged all their money and wants to go out to dinner. Will they manage to come up with the cash to dine out? And, once they’re there, how much will they be able to afford? With the included menu, you can have fun creating different orders and combinations of menu items. If you were part of the pig family, what would you order at the restaurant?
Best to Read with Parents
Turn storytime into money time with The Kids’ Allowance Book. It’s a great tool for parents and kiddos to create an allowance plan that works for their family! And it does more than just tell you how much money you should get and how to spend it. It’s a fun read with exciting characters who learn from their mistakes. Whether you want an allowance or want to make the most of the one you already have, this book will help you become a Superstar Allowance Kid!
If you want to manage your allowance, you need to know how to count money, add it up, and make change. Want to learn all that while having fun? Check out The Penny Pot, a funny book that introduces you to money math concepts. It includes interesting stories and great illustrations to make concepts easier to understand and use in everyday life.
Now that you have all the info you need, it’s time for you and your parents to get this allowance started! Remember to keep learning along the way and adjust the way you budget your allowance whenever you need to. This is the key to making the allowance program and your money work for you!