…can be tied to weekly chores or homework performance, incentivizing otherwise resistant kids.
…cut down on the revolving (and seemingly near constant) requests for spending money. For elective purchases, kids can now learn to budget their own resources.
…open the door to teaching about money management. For instance, a percentage might be put aside for college, teens might open up a checking account and so forth.
…get kids thinking about the importance of giving to charity.
…sometimes actually lead kids to ask for other opportunities to earn money around the home.
Parents often ask me how much they should allow their child to earn. There isn’t really a guideline that I can say is more or less psychologically indicated. It really comes down to your standard of living and the values you wish to promote. That said, you could think of $1 per year your child has lived outside of the womb as a rough starting point; you can adjust up or down from there based on your standard of living and values.
Let me offer two caveats:
First, it’s important to not make a kid spend his or her allowance on necessities such as clothes and food. Providing necessities is our job. Of course, if your budget parameters call for your child to bag her lunch, but she prefers to purchase it at school with her allowance, that’s fine. Or, you have it in mind to purchase a durable sneaker but your kid wants the designer brand, that’s fine also.
Second, it’s important to not try to over control how your child spends his or her allowance. If the proposed expenditure isn’t inappropriate for him or her (e.g., a 10 year old wants to purchase a mature rated video game), or immediately harmful (e.g., yes, too much ice cream is harmful in the long run but a dosing of it isn’t immediately harmful once allergies are ruled out) it’s important to let your kid make his or her own decision, even if it drives you crazy. It’s hard to learn how to manage money, and how to make decisions, if mom or dad are always calling the shots.