When teens are given control of money used for personal expenses, they learn the value of a dollar, and begin to understand financial responsibility. But for teens not yet old enough to get a part-time job, it can be tricky to figure out how much to give as an allowance.
It’s important to show teens how to stick to a budget and have a handle on their expenses. But it’s also a good idea to see that they have some money that isn’t earmarked for anything specific, so they learn how to make smart choices on their own.
Below are a few tips for how to arrive at an appropriate amount for your teen’s allowance, and how they can participate in the process of earning their funds.
1. Determine which expenses will be your teen’s responsibility. For example, your teen could be in charge of their clothing budget, school lunches, their smartphone bill, or have to use their own money to purchase apps.
2. Estimate the cost of each item on your teen’s responsibility list.
3. Don’t set too tight of a budget, and try to build in a contingency for unexpected costs (if your network provider increases its price, for instance). Use past experiences to determine amounts that don’t have a set price tag like entertainment or clothing. Add up these amounts to get a base amount.
4. Make a list of chores around the house that are over and above the list of things your family does just because you all live there, like laundry and dishes. Put a price on each chore.
5. Talk to your teen about which chores she would like to do each week. Determine how long each chore will take, when it must be done, and what consequences to expect if it isn’t completed.
6. Add the base amount to the amount your teen earns with chores for the base allowance. Determine how often your teen will receive her allowance (weekly, monthly, etc.).
7. When talking to your teen about their allowance, be sure to send clear messages about how money needs to be used. Give them a bit of freedom to see how quickly they’ll go through their money if they don’t stick to a budget and get their expenses paid, but keep an eye on overages, especially that cell phone bill.
8.Always allow your teen to appeal for more money at future dates if circumstances change. For instance, he joins the soccer team and needs to buy soccer boots that weren’t in his clothing budget. Work out the appeal together and come to an agreement that you both can live with.
But the flip side of that coin applies as well: If your teen runs out of money because they did not spend it wisely, don’t make a habit of fronting them extra cash. If they’re to learn anything about financial responsibility, teens need to see the consequences of overspending and failing to live within one’s budget.
By Mooi Gogo