Bridging the gap:
Setting an allowance for kids
in two-household families
When I was young, I remember getting five cents every Sunday and blowing it on my favorite thingĖcandy. My parents gave me an allowance, but they did not give me guidance on what to do with it. If used as a learning tool, an allowance provides the opportunity to teach a child how to handle money well and how to be a good consumer.
Deciding how the allowance system should work can be difficult enough with parents under the same roof, but it is really a challenge if the parents live in two separate households. Just remember, having a financially adept child is worth the effort to work together.
You can teach your children about the importance of saving money, doing for others, and how to spend money wisely. The goal is to guide your children in making good decisions, not to dictate how they should spend.
If you think your child is at an appropriate age to begin receiving an allowance, initiate a dialogue with your childís other parent(s). Donít make the mistake my parents made by "telling" each other what they should do or what they "expected" each other to doĖa method that ensures failure.
Emphasize the benefits of giving your child an allowance, and stress that the money is strictly for the childís use. Get a feel for whether your ex-spouse is open to the idea, willing to share the responsibility, or has no interest. If possible, joint decision-making is ideal for best results.
How much allowance?
How much allowance depends on your child, his/her age, and for what the money is to be used.
Some parents give a dollar amount equal to the childís age, while others give money equal to the childís grade. Other parents match what their childís friends get, or they adjust for inflation what they received as a child. Whatever you decide, make sure the amount fits into both familiesí budgets.
Once you settle on an amount, decide whether that amount will be split evenly between households, alternated weekly or monthly, allocated according to income, or paid by some other arrangement. If your childís other parent chooses not to participate, decide what you can afford to do on your own. Donít try to keep up with the Jonesí if you canít afford it. Remember, children learn about money by seeing as well as doing.
In addition to how much allowance your child will get, you need to negotiate when or how often he/she will receive that allowance. Also communicate to your child how you expect the allowance to be used. If possible, be consistent between households.
For example, for a younger child, the allowance could be given every Sunday in both households. For an older child, the money could be paid the first Sunday of every month. Make sure you pay on time, donít give advances and try to avoid giving loans. Stress the importance of learning to live within their income.
If your child is living primarily in one household, the allowance could be combined, while letting him/her know it is from both households and is to be used to cover purchases in both households. Be consistent in how the allowance is to be used. Is it to pay for extras, such as candy, video games and movies? Or is it to be used for these purchases plus others, such as clothing and haircuts? Whatever rules you both set, apply these standards in both households.
Don't reward or punish with an allowance
Allowances should not be tied to household chores. Children have a responsibility to help out around the house because they are members of the household, not because they are getting paid. Donít use an allowance as a reward or punishment; there are better ways to teach good behavior.
At times, parents may not be able to agree on whether to give an allowance, how much it should be, and what the rules should be. If this is the case, your only choice may be to give your child an allowance to cover only your household, and set the rules for your household.
Avoid competing over your childís affections by seeing who can give the bigger allowance. The goal of an allowance is to teach your child how to manage money effectively. The lesson is lost if your child receives an excessive amount and can spend without having to learn to make choices or distinguish between wants and needs.
Working out an allowance arrangement by bridging the gap between two households may be challenging, but the results will be positive for your child.
Suzanne Zemelman, MS, JD
Consumer & Family Economics Specialist