Giving Teens an Allowance – Money Management Tips for Parents
These tips for giving teens an allowance are from a money expert whose job revolves around giving money management tips to parents and kids! A parent asked me about giving her 13 year old teenager $50 a week for an allowance. Since I’m no expert on teens and money management, I asked the creator of KidsSave for her input. Here, Karyn Hodgens offers some practical tips on giving teens an allowance…
This was my reader’s question:
“I give my 13 year old $50 a week for allowance, and she wastes it on hair glitter, iPhone apps, and Uggs. We argue constantly about how she spends her money, and I’m sick of it! How can I stop her from blowing her money? How can I teach her about achieving money goals?” ~ Sherry, from California.
Below are Karyn’s money tips for parents, beginning with a suggestion that Sherry re-evaluate how much allowance she gives her teen. For more money tips for parents, read Allowance Magic: Turn Your Kids Into Money Wizards — it’s a step-by-step program for teaching money management to kids. Now, for Karyn’s advice…
Karyn, how much should a teen get for allowance? Is $50 a week too much?
Sherry might want to re-evaluate the amount of allowance given. Fifty dollars a week is a lot of money for a 13-year old, who’s probably giddy over having that much to spend! I think $13 a week is more reasonable ($1 for every year of age). It sounds like she’s already responsible for her discretionary spending even though her mom may take issue with some of the items. With a reduced allowance, her child will learn to prioritize – which is part of learning money management for teens.
She’s not going to be thrilled with the idea of a reduced allowance (!), so sit down and come up with a list of Above-and-Beyond jobs that she can do around the house to earn extra money. These can be things like washing the car, yard work, folding laundry, etc. Kids who earn their money tend to value it more, which means they are more careful with how they spend it.
The reduced allowance also makes teaching her how to set and acheive financial goals much easier. It’s hard to buy a pair of Uggs with an allowance of $13 a week. By the way, she should also be paying for part of that cell phone she buys all those apps for!
4 Tips for Giving Teens an Allowance – Money Management Tips for Parents
1. Remember that an allowance is a tool to help teen learn how to manage their money. A good time to start is around age 5 or 6. Start with a base allowance, not tied to chores, of half their age per week and increase that to their age per week by the time they are teens. Provide Above-and-Beyond jobs so teens can earn extra money.
2. Allow your teen to spend his money as he wishes – within reason. He’ll make financial mistakes along the way which become the perfect opportunities to teach him how to do it differently the next time. Eventually he’ll learn the benefits of being a wise consumer and the value of saving some of his money.
3. Do not give advances on allowance. When the money is gone, it’s gone. To manage their money successfully as adults, kids need to learn how to budget and live within their means. This may be the time to help them set up a personal financial goal. There will be time later to teach about loans and interest; kids need lots of hands-on experiences with money first.
4. An allowance stops when your teen has a regular paying job, usually around age 16 or 17. Teens this age like the independence a paycheck gives them. And if you follow the above steps, they’ll have the skills to be wise about what they do with that extra money.
If you have any thoughts or questions on giving your teen an allowance, please comment below…
Karyn Hodgens has a degree in child development and a multiple subjects teaching credential. Her passion is educating parents on the importance of financial literacy for kids. She also contributed Money Saving Tips for Kids Going Back to School, here on Quips & Tips for Achieving Your Goals.
Are you interested in teaching your teen or child money management skills? Sign up for Hodgens’ next Beyond-the-Piggy-Bank 15-Day Challenge, which begins soon. She’ll send a regular email that describes an activity for parents to do with their kids. By the end of the challenge, parents will have a foundation for teaching their kids about money.