To help you wade through all your options, we consulted with Ellie Kay, family financial expert and author of "The Sixty Minute Money Workout," to answer all those pressing questions concerning allowance.
LV: Should you ever tie allowance to chores?
EK: No. Kids should learn to do chores as part of a good work ethic, and because they are part of the family, not because of how much they are getting paid to do them. As a mom, I wanted my kids to take out the trash because I said so. If I paid them for chores, then a simple request might turn into, “Well, how much will you pay me for that?”
LV: At what age should you start giving out allowance?
EK: Every kid develops at a different rate, but most can understand the concept of an allowance starting at around six years old.
LV: How should you help your child manage that money?
EK: When your child is young, she will need your help to learn how to save. Start teaching her the rules as soon as she starts getting money: For example, put 10% in savings, give 10% to charity and manage the other 80% wisely.
If your kid wants a toy, make her save up to buy it for herself. “Kids take much better care of an item they’ve invested in through hard work and saving,” says Kay. “This will eventually translate into a good work ethic later in life.”
LV: How much allowance should you give?
EK: This is going to vary from family to family based on budget, but it should be tied to how old kids are. So, while older kids may get more money, they’ll also need to start paying for more things out of their allowance. A good rule of thumb is to give a dollar per year of age. For example, that would mean an eight-year-old might get $8.
Additionally, while weekly allowances tend to be the norm, we also think it’s fine to do it every other week. Just be consistent, so your child knows he can count on the same amount on a regular basis.
LV: If I'm not paying her to do them in the first place, what should I do if my child isn't doing her chores?
EK: We don't pay our kids to do chores, but we do pay other family members to do chores when one child isn't doing hers. For example, when my son was 10, he left the house without making his bed for several days in a row. So we had his 7-year-old sister make his bed for him. On allowance day, we gave our son his allowance, and then he had to turn around and give his sister 50 cents for every day she made his bed.
Not only did he lose money, but he also had the pain of giving his money to his sister. He never left his bed unmade again.
LV: I've already been paying my child to do chores. How can I transition into not paying him for them anymore?
EK: Call a family meeting where you sit down and explain the new policies. Tell your child that you are going to give an allowance that isn't based on chores, then outline the consequence for not doing them (as above with my son). Stress that allowances are a privilege and not a right. Also stress that kids are expected to do chores because they are a part of the family, but they can do special jobs (as determined by you) that go above and beyond their normal chores for additional money.