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Apache is functioning normally

May 23, 2024 by Brett Tams

It’s a scenario many people aren’t prepared for: A loved one becomes disabled and requires your care. That care can bring financial challenges you may not be prepared for. In fact, the Centers for Disease Control and Prevention (CDC) reports that a person with a disability in the U.S. will spend $17,431 each year on average for healthcare expenses—in many cases, for the rest of their lives.

What’s more, medical costs may only scratch the surface of the financial repercussions. A person with a disability may lose some or all of their wage-earning ability, and the individual caring for them might also have to work fewer hours. You may incur additional expenses for home modifications, assistive devices, or occupational therapy, and a child or adult with a disability may also need specialized caregivers.

If all of this sounds overwhelming, take heart. Many financial resources exist that are designed to help people who are supporting a disabled adult or child, as well as to help secure your loved one’s financial future. Here are important things you need to know to make that happen.

Defining a disability

A basic definition of disability is any condition that challenges a person’s ability to perform certain activities or interact with their surroundings. But that definition may become more nuanced when it involves someone’s ability or inability to work, as well as any government benefits they are entitled to receive.

For adults, the Social Security Administration (SSA) defines a disability as any mental or physical condition that is expected to be continuous in nature for at least 12 months that renders a person unable to perform the duties required by a job. To meet the SSA’s definition, people must have “a severe impairment(s) that makes you unable to do your past relevant work … or any other substantial gainful work that exists in the national economy.”

Per the SSA, a child is considered to have a disability (and be eligible for benefits) if they “have a physical or mental condition that very seriously limits his or her activities” and if this condition has lasted or is expected to last for longer than a year.

Assessing whether your loved one’s disability meets the SSA’s definition is the first step in researching available benefits. Your family healthcare provider or a professional advisor who specializes in disability benefits may be able to help you make this determination.

Benefits for children with disabilities

Children with disabilities are entitled to multiple government benefits to ensure they have quality healthcare, as well as services and supplies to meet their basic needs. One form of aid is Supplemental Security Income (SSI), which is distributed by the SSA. The requirements for children to receive this supplemental income include:

The applicant must have little or no income.
The applicant must have few or no assets.
The applicant must have a disability (including blindness).

The amount of money received by each approved applicant is determined by various factors, such as where they live and how much they own.

“Qualifying for SSI is critical,” says CPA James Lange of Lange Financial Group in Pittsburgh, “because it simultaneously qualifies you for other benefits.”

For example, in most states, children with disabilities who qualify for SSI are automatically eligible for Medicaid healthcare coverage. If a child with a disability does not qualify for SSI, they can sometimes still receive Medicaid benefits via a Medicaid waiver, which waives the income- and resource-related thresholds for qualification—in other words, your child could receive Medicaid benefits regardless of your income or assets. These policies can differ from state to state, so check your home state’s department of health and family/social services website for the most accurate and current information.

The bottom line when it comes to SSI, Lange reiterates, is to be proactive. “Don’t procrastinate,” he explains. “Getting all of this right will make a huge difference in your and your child’s life. You may be in for a long and difficult process of providing for your child and should do everything you can to take advantage of government programs.”

Finally, families who earn too much to qualify for Medicaid may still be eligible for the Children’s Health Insurance Program (CHIP), a government program that offers low-cost health insurance to children. If the parent of a child with a disability earns too much to qualify for Medicaid benefits but still struggles to pay healthcare expenses, CHIP can be a helpful solution. As with Medicaid, each state runs its CHIP program differently, so check your home state’s website for more information.

Benefits for adults with disabilities

Adults with a disability may also be eligible for SSI if they have little or no income, few or no resources, and have a disability (including blindness) or are age 65 or older. They may also be eligible for Medicaid benefits and Medicaid waivers.

In addition, those who previously worked a certain number of years and paid into Social Security may qualify for Social Security Disability Insurance (SSDI) benefits. Eligibility for SSDI is based on two requirements. The individual must have:

A disability that prevents the individual from working for at least a year
Years of work during which they have earned sufficient Social Security credits

Of course, each case is different, and eligibility will be determined by the SSA.

“It can be tricky to navigate some of the rules around SSDI,” says Dan Stous, a Certified Financial Planner^® and lead wealth advisor at Flagstone Financial Management in Lincoln, Nebraska. “But in a nutshell, you should be aware that your disabled loved one may qualify for federal financial aid.”

Adults with disabilities who continue to work

People with disabilities can receive disability benefits and continue to work—up to a point. Someone receiving SSDI payments may not earn more than what’s known as substantial gainful activity (SGA). As of 2024, that amount is $1,550 per month. However, people who are blind have a higher SGA of $2,590.

Adults ages 18 to 64 with a disability who want to work can get a leg up through the Ticket to Work program, a government program designed to help people with disabilities find employment that’s right for them. The program guides participants through free employment services that can help them determine whether they are able to work, prepare to enter the economy, find a job, and be successful in the workplace.

Veterans with disabilities

Veterans with certain disabilities can qualify for monthly pension benefits, depending on yearly income and net worth. To be eligible, Veterans:

Must not have been dishonorably discharged
Must have served a certain length of time in the military—including at least one day during wartime—or have served as an officer
Must be at least one of the following:
- Over the age of 65, permanently and totally disabled, living in a nursing home or long-term care facility due to a disability, or receiving SSDI or SSI payments

Caregiver support

A caregiver may get overwhelmed by aspects of providing care to a loved one, including managing finances. They may also struggle with the everyday demands of caregiving. Fortunately, resources exist that can help ease these hardships.

Some states offer programs that compensate family members or friends caring for a relative who receives Medicaid benefits. These programs vary significantly between states and often have complex eligibility requirements, so it’s important to do your research before applying.

If the individual you’re caring for (say, your spouse) previously purchased a long-term care insurance policy, they may be eligible to submit claims for in-home care. Some policies will also provide compensation for a family caregiver. Contact your insurance agent and ask for a written confirmation of benefits.

For Veterans specifically, in-home care is accessible through Veteran-Directed Care, a government program that provides services to Veterans who need assistance with daily activities. This program can supplement the caregiving provided by a loved one to ease their care workload. Veterans who qualify can also make use of Aid and Attendance benefits or Housebound benefits, which are monthly payments that can be put toward in-home care for those with permanent disabilities.

If you’re the parent of a child under the age of 18, are unemployed or underemployed, and can demonstrate that you have a low or no income, you may qualify for Temporary Assistance for Needy Families. This government program provides states with grant money to assist families that are struggling financially. If you qualify, you may receive a monthly cash payment for a set period. For many states, the lifetime limit of this aid is five years.

You might also consider applying for benefits from the Supplemental Nutrition Assistance Program (SNAP), which offers subsidies for food purchases to ensure that those with low or no income can maintain good nutrition. The SNAP program has special eligibility guidelines for those with disabilities, which may make it easier for those who already qualify for SSI or SSDI to also qualify for food assistance.

Banking options for people with disabilities

People who are disabled have access to special banking accommodations, including ABLE accounts, which allow people with disabilities to set aside savings without being taxed on the earnings of those accounts, as long as they spend the money on qualified expenses. (In this way, these accounts are similar to 529 college savings accounts.)

Another key benefit: For the most part, savings in an ABLE account won’t affect eligibility for SSI, Medicaid and other means-tested programs.

Right now, ABLE accounts are available to people who became disabled before the age of 26. But thanks to the recent ABLE Age Adjustment Act, that threshold will increase to age 46 starting on the first day of 2026.

“I’ve found that ABLE accounts aren’t as well-known as I would have hoped among parents of children with disabilities,” says Stous. “They’re a great tool to help financially care for a disabled loved one and can act as a first step in that journey of preparing for when you may no longer be around and your child can no longer rely on your income to help meet their needs.”

There are limits to the amount of money that can be deposited into an ABLE account each year—$18,000 in 2024, with additional annual contributions allowed for ABLE account holders who work and who don’t participate in an employer-sponsored retirement plan. There are also limits to what the beneficiary can spend the money on—qualified expenses include things like education, healthcare, assistive devices, and employment training. It’s also helpful to keep in mind that even if your state doesn’t offer an ABLE account program (though most do), you can enroll in another state’s program even if you’ve never lived there.

Accessible facilities and products

Many banks also provide assistive technologies for people with disabilities to make their banking experience easier. These can include things like spaces designed to accommodate people who use wheelchairs or other mobility devices, digital banking interfaces that can be used even by those who have difficulty seeing images or colors, and ATMs that are accessible to all.

You can help a loved one with a disability

For people with disabilities and the loved ones who care for them, financial concerns can be significant—but there are numerous solutions to make them easier to navigate. With the right tools and the needed know-how to make wise decisions, meeting the financial challenges that a disability can bring becomes infinitely more manageable.

Looking for ways to pay for upgrades that make your home more accessible? Learn how to finance home modifications that will support your loved one with disabilities.

The article and information provided herein are for informational purposes only and are not intended as a substitute for professional advice. Please consult your financial advisor with respect to information contained in this article and how it relates to you.

Articles may contain information from third parties. The inclusion of such information does not imply an affiliation with the bank or bank sponsorship, endorsement, or verification regarding the third party or information.

Source: discover.com

Apache is functioning normally

May 22, 2024 by Brett Tams

There are many reasons why you might end up accidentally depositing a fake check into your bank account. Scammers often use fake checks as part of various schemes to steal money from unsuspecting victims. They may send you a fake check and ask you to deposit it, then request that you send them a portion of the funds back, claiming it’s for fees, taxes, or some other reason. By the time the bank realizes the check is fake, you’re left responsible for the full amount.

Why do these scams work? The fake checks generally look just like real checks, even to bank employees, with appropriate watermarks, and they may appear to be issued by legitimate financial institutions.

Here’s a closer look at what happens if you accidentally deposit a fake check, plus ways to spot counterfeit checks.

Key Points

• Depositing a fake check can initially seem problem-free as funds often become available quickly.

• Once a bank identifies a check as counterfeit, the depositor must cover the check’s amount.

• Additional consequences include potential overdraft fees, late payment fees, and possible account closure.

• A negative banking history, such as being reported to ChexSystems, may result from depositing fake checks.

• Spotting fake checks involves checking for proper paper quality, bank details, and unusual amounts.

Consequences of Depositing Fake Checks

If you accidentally deposit a fake check, everything may be fine at first. By federal law, the bank must make the funds available to you within one or two business days. When the funds are made available in your account, the bank may say the check has “cleared,” but that doesn’t mean it’s a good check.

Fake checks can take weeks to be discovered and sorted out. When the bank realizes the check is fake (often after you’ve spent the money or given it to someone else), here is what happens:

• You have to cover the cost of the check. The bank will typically debit your account for the amount of the fake check, and may also charge you a processing fee.

• You’ll lose any money you sent to the scammer. While in some rare cases you may be able to request a chargeback on a fraudulent transaction, it’s unlikely that you will be able to get any money back once you’ve given it to a scammer.

• You may have to pay overdraft fees. If you spent the check amount before the bank realized it was fake and debited your account for the amount, it’s possible your account could get overdrawn. In that case, you could face overdraft fees, which can run $30 to $35 per transaction.

• You may have to pay late fees. If you aren’t able to pay your bills because of insufficient funds after depositing a bad check, companies may charge you late fees.

• Your bank could close or freeze your account. Banks will often freeze or close accounts for suspicious activity, including attempts to pass off bad checks. You’ll want to check your bank deposit account agreement to see in what scenarios your bank can close your account.

• It could hurt your credit score. If you relied on the check to pay upcoming bills, you might miss their due dates. Because payment history is the biggest factor credit bureaus use to determine your credit score, missed payments can do damage to your credit.

• Your banking history could be tarnished. The bank may report the fake check incident to the banking reporting agency ChexSystems. If so, the agency will then record that information in its files about your checking history. Banks and credit unions may use that information to determine whether to allow you to open a bank account in the future.

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Can You Go to Jail for Depositing Fake Checks?

Whether or not you’ll face criminal charges (and potential jail time) for depositing a fake check will depend on whether or not you knowingly deposited a fake check, as well as the laws in your state. If you are simply the victim of a scam, you likely won’t face criminal charges or jail time.

Knowingly committing check fraud, however, is a serious crime that can result in significant fines and even jail time. In Indiana, for example, the lowest level of check fraud is a misdemeanor, which can lead to imprisonment for up to one year and a fine of $5,000. If the amount on the check was between $750 and $50,000, you will instead be charged with a felony. The potential sentence for this is six months to two- and-a-half years in jail, plus up to a $10,000 fine.

If you are convicted of a check fraud felony in New York State, on the other hand, it could mean up to seven years in prison.

Recommended: How Long Is a Check Good For?

6 Tips to Spot Fake Checks

Counterfeit checks can look incredibly real, making them difficult to spot without careful examination. To protect yourself from falling victim to check fraud, it’s important to know how to identify a counterfeit check. Here are six tips to help you spot a fake.

1. Feel the Edges of the Check.

If the check is legit, it should have one perforated edge (where it was ripped from a checkbook). A check that is smooth on all sides is a tipoff that it’s a fake.

2. Examine the Paper

Genuine checks are usually printed on high-quality paper with intricate designs that are hard to replicate. Hold the check up to the light to see if it has watermarks or security threads. Genuine checks often have these features, while counterfeit checks may appear flat and lack these security measures.

3. Check the Bank Information

Verify that the bank’s name and logo on the check match the ones used by the actual bank. You can do this by visiting the bank’s official website or calling their customer service hotline. You can use an online tool like BankFind to check if a bank is backed up by the Federal Deposit Insurance Corporation (FDIC).

4. Scrutinize the Check Amount

Be wary of checks that have unusually high or round amounts. Scammers often use these amounts to make the check look more appealing. If you receive a check for an unexpected amount, it’s a good idea to contact the issuer directly to verify its authenticity.

5. Look for Typos

Counterfeit checks often contain spelling mistakes, grammatical errors, or inconsistent fonts. Carefully review the check for any such errors, as they can indicate that the check is fake.

6. Be Wary of Pressure Tactics

deposit the check quickly. They may claim that the check is a limited-time offer or that you must act fast to receive a prize or reward. Take your time to verify the check’s authenticity before taking any action.

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What if Someone Else Deposits a Fake Check Into Your Account?

If someone else deposits a fake check into your account, the situation can be complex and you’ll want to take prompt action to mitigate any potential negative consequences.

As soon as you become aware of the fraudulent deposit, contact your bank to report the issue and give them all the relevant details, including the date of the deposit, the amount, and any other information you have about the check. It’s also a good idea to ask your bank to place a hold on your account to prevent any further transactions from occurring until the situation is resolved. This can help prevent additional fraudulent activity.

As your bank investigates the fraudulent deposit, they may request documentation to support your claim that the deposit was fraudulent, such as copies of the fake check, any communication you have had with the person who deposited the check, and any other relevant information.

Going forward, you’ll want to take steps to protect your account from further fraudulent activity. This may include changing your online banking passwords, setting up alerts for suspicious activity, and being cautious about sharing your account information.

The Takeaway

Check fraud is just one of the many ways that scammers con people into giving them money. If you unknowingly deposit a fake check into your account, the consequences include fees and, possibly, a negative mark on your banking history and the closing of your account. To avoid being scammed, look for the signs of a fraudulent check, and avoid cashing a check that you weren’t expecting, or for more than the agreed-upon amount.

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FAQ

Can you get in trouble for accidentally depositing a fake check?

Yes, you can potentially get in trouble for accidentally depositing a fake check. While an accidental deposit may not lead to legal consequences, you may get hit with bank fees, you’ll need to repay any amount of the check you spent, and the bank may put a hold on your account. It’s crucial to cooperate with your bank’s investigation and take steps to rectify the situation promptly.

Is the bank responsible for cashing a fake check?

Generally, banks are not responsible for cashing a fake check if they can demonstrate that they followed proper procedures and exercised reasonable care in processing the check. However, if the bank is found to have been negligent or failed to detect obvious signs of fraud, they may be held liable for cashing a fake check. It’s important to review your bank’s policies and procedures regarding check deposits and fraud prevention.

Photo credit: iStock/AndreyPopov

SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.

The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

This article is not intended to be legal advice. Please consult an attorney for advice.

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Source: sofi.com

Apache is functioning normally

May 21, 2024 by Brett Tams

Our goal here at Credible Operations, Inc., NMLS Number 1681276, referred to as “Credible” below, is to give you the tools and confidence you need to improve your finances. Although we do promote products from our partner lenders who compensate us for our services, all opinions are our own.

Home equity loan Home equity line of credit (HELOC) Interest rate Fixed Variable Monthly payment amount Fixed Variable Closing costs and fees Yes Yes, might be lower than other loan types Repayment period Typically 5-30 years Typically 10-20 years

FAQ

What is a rate lock?

Interest rates on mortgages fluctuate all the time, but a rate lock allows you to lock in your current rate for a set amount of time. This ensures you get the rate you want as you complete the homebuying process.

What are mortgage points?

Mortgage points are a type of prepaid interest that you can pay upfront — often as part of your closing costs — for a lower overall interest rate. This can lower your APR and monthly payments.

What are closing costs?

Closing costs are the fees you, as the buyer, need to pay before getting a loan. Common fees include attorney fees, home appraisal fees, origination fees, and application fees.

If you’re trying to find the right mortgage rate, consider using Credible. You can use Credible’s free online tool to easily compare multiple lenders and see prequalified rates in just a few minutes.

Source: foxbusiness.com

Apache is functioning normally

May 21, 2024 by Brett Tams

Part of teaching your kids to be more independent is giving them money as part of an allowance. It can be an exciting time for your child — remember when you first got your hands on some cash? It can also be fraught with some bumps along the way as your child learns sound money management skills.

That’s not to say it’s not worth it. Rather, deciding on how to give them money and helping them budget their allowance can take time, but your kids will thank you for it. Read on for ways that you may handle this part of parenthood and help your child build financial literacy.

What Is an Allowance?

An allowance for kids is a predetermined amount of money you give them on a consistent basis, most commonly on a weekly or monthly cadence. You can choose to have your child earn their allowance by completing chores or “jobs” or do none at all. The idea is that with an allowance, your child can learn the value of work (if you have them do chores), gain experience handling money, and learn responsibility.

The decision to give an allowance is up to the family. The same holds true regarding whether the allowance is earned by completing chores. Depending on the age, some parents may feel more comfortable with giving their kids cash. Some may feel older kids can handle their own debit card and a children’s checking account — with some limits, of course.

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Types of Allowances

The type of allowance you give your child is based on your preferences, what you want your child to learn, and their needs. Here are some options for how an allowance can work.

Chore-Based Allowance

The chore-based allowance tends to be the most common, where a child is given some household tasks and offered a certain amount once these tasks are complete.

• Tasks typically will depend on your child’s age and their readiness to handle certain types of responsibilities.

• It can be wise to assign tasks your child can realistically accomplish so that they don’t wind up feeling discouraged.

For example, say your nine-year-old wants to start doing chores regularly to receive allowance money, which they plan to save up to buy a new science kit. Based on what they’ve demonstrated to you in the past, you believe they’re able to load the dishwasher and help put the laundry away. You discuss this with your child, and you both agree that you’ll give them a weekly allowance if they complete all their assigned chores.

Pure Allowance

Some parents would rather teach their child money management skills without connecting this to some sort of labor. Instead of asking your child to complete chores, parents agree to give them an allowance — typically a consistent amount in cash or perhaps put on a debit card connected to a bank account. While your child may still do chores around the house, the allowance isn’t contingent upon its completion.

Hybrid Approach to Allowance

Parents who want to teach their kids about reaching a goal (and also how money is tied to work) can take the hybrid approach. Here, you’ll give your child a regular allowance that isn’t contingent on any chores. However, you give them an opportunity to earn more money by taking on extra chores around the house. In that way, they’d get more experience in allowance management.

• For example, your child receives $5 a week, but they want to earn more so they can head to the local arcade for their friend’s birthday party or see their savings grow.

• Based on their age and ability, you have them do a chore or two (pulling weeds in the yard or taking out garbage). Once the tasks are complete, you give your child the amount you agreed upon.

How Much Allowance Should You Give Out?

The amount you should give your child will depend on several factors. Ultimately, it will depend on your budget and what you can afford to give your child. One popular formula is to give a child $1 or $2 per week for every year of age, which would mean $8 or $16 for an eight-year-old and $16 or $32 for a 16-year-old.

You might consider not just the age of your child but also how challenging or time-consuming the task is. A couple of other pointers:

• If you’re unsure what’s a good amount, you can ask some of your trusted parent friends or family members about what they’re giving their child.

• If your child reaches the age where they can get a part-time job, you may even consider lowering the amount or not giving an allowance at all since they can earn their own pocket money.

Whatever the amount you choose to give, make sure you set clear expectations. This means spelling out the chores in detail (is the child making their bed every day or just on weekdays, for instance?). It also means determining how much money will be paid, when, and how, as well as what (if anything) they will receive if a task is not fully completed. This can result in headaches down the road.

Advantages of Giving an Allowance

There are plenty of upsides to giving an allowance. Consider the following:

Teaching Money Management

Giving an allowance, whether tied to chores or now, gives your child an opportunity to understand how money works. Plus, it can teach them that the items they want to purchase or activities they want to do cost money. It gives them hands-on experience earning, saving, and spending, providing a valuable lesson in money management for kids.

They’ll learn about what it takes to purchase something, such as looking at price tags in the store.

• To go a step further, you can even teach the concept of saving and investing money and why that can help them as well.

• If you open a children’s or teen’s bank account for your child’s allowance money, that will teach valuable basic banking and financial literacy skills too. They might see how interest compounds and grows their savings, for instance.

• The same holds true if they get a debit card (typically one where you can view and possibly approve their spending).

Teaching Responsibility

An allowance can teach your child what it means to be responsible with money. They can learn not to spend their earnings on snacks if they’re saving for, say, a video game. They can learn to safely store their funds, be patient until their next paycheck rolls around, and earn extra money if they’re eager to accumulate a certain amount.

Building Confidence

Giving kids an allowance can help boost their confidence because it can show them you believe they’re ready to earn and manage their own money. They may also feel proud of their ability to make cash and spend it as they see fit, whether that means buying themselves new clothes or making a donation to a favorite charity.

Creating a Safe Space to Learn

Instead of having kids learn about money and other types of responsibilities when they’re grown, giving an allowance can give them a bit of a head start. You can help guide them to make their own decisions, which can include making money mistakes without huge consequences. Any errors they make can be an opportunity for you to teach your kid about what they can do differently next time.

Recommended: Guide to Opening a Bank Account for a Minor

The Takeaway

If you choose to give your child an allowance, whether it depends on chores or not, it can be a good way for them to learn how to manage a bit of money responsibly. You might have them work for the money, not work at all, or have them earn a bonus for doing additional chores.

Whatever amount you give, showing your child how to save their money in a savings account is a great teaching opportunity.

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FAQ

What is a fair allowance for kids?

A fair allowance for kids should be based on age and what you feel is appropriate. Many parents provide $1 or $2 per week for each year of the child’s age (meaning, if a child is 10, they get $10 or $20 per week). You might survey other parents in your circle and see what they give their kids as a way of coming up with a ballpark figure.

Are allowances bad for kids?

In most cases, allowances can have several advantages for kids, such as learning how to handle money and becoming more responsible. However, some parents may believe that allowances aren’t appropriate and should in no way feel obligated to give one.

How do parents give allowance?

Parents can give an allowance in a weekly, biweekly, or monthly cadence (or whatever other frequency suits them). They can also give a consistent amount or vary it depending upon tasks completed. In addition, an allowance can be paid as cash, on a debit card for older kids, or deposited into children’s bank account or an account that their parent holds for them.

Photo credit: iStock/SbytovaMN