Allowance update

Three years on I can say that we’ve been wildly successful meeting the first objective.

I’ve written before about Adam’s allowance. To recap, his Dad and I started giving him $2 a week when he was five, with the hopes that he would start to have an appreciation for what things cost and to teach him the discipline of saving up for something special.

Three years on I can say that we’ve been wildly successful meeting the first objective. Adam does have a good sense of what various toys, games and treats cost—and he spends his money judiciously. Even more impressive, he’s been known to chime in when we’re shopping for him (say, for yet another pair of shoes—those feet grow at a furious pace!) offering to contribute money of his own because he doesn’t want us to have to spend too much on him. (So far, we’ve declined such offers, but it’s not like he’s buying designer labels, either.)

I’m not sure we’ve made much progress on the savings front, though. Adam often lacks the patience to delay gratification, and will choose to buy whatever he can afford right now rather than wait until he has enough money for the thing he really wants, but is more expensive. He also isn’t saving at all for the long haul. We do have a bank account for him and have put some of his birthday money in there over the years—but given that he isn’t actually aware of the bank account’s existence, I don’t think it can be considered much of an accomplishment for him.

Then I came across this survey about the going rate for allowances, which suggests that an appropriate amount for children ages 4-9 is more than $4 a week—twice as much as Adam has been getting. (For those of you with older kids, the same survey suggests an average of $8.70 for ages 10-13, and $16 for teens up to 17.) So now I’m thinking we should increase his weekly take, but with the understanding that a certain percentage will go into his bank account for long-term savings.

I’m not going to lie, I’m a little scared that upping Adam’s allowance will just lead to more spending and will make him even less apt to delay gratification. But if I can get him to see those extra $2 a week as “extra” money that ought to be saved, I’ll be teaching him an invaluable lesson. When he’s grown and earning his own income, he’ll (hopefully) regard raises as “extra” money to be saved—for a house or retirement—rather than automatically increase his day-to-day spending. I admit, it’s a lofty goal. But since he’s only eight, he has a long time to learn this particular lesson.

What do you think is the right amount for a weekly allowance? Email us

About the Author

Tamar Satov

Managing Editor, CPA magazine
Tamar is a journalist specializing in business, parenting and personal finance. She blogs regularly in this space with advice and anecdotes on her efforts to raise a money-smart kid.