Children and Allowances

The topic of allowances is often a source of discussion between parents. There are two views about allowances. One is a payment–for-work approach and the other is based on a belief that a child is entitled to a share of the family income, just as he or she is “entitled” to some responsibility for household chores.

Two advantages of an allowance are that it provides the practice of living on a regular income and it teaches children to learn from their financial mistakes (hopefully while the mistakes are still small) so that they are better able to make money decisions as they get older.

Disadvantages include the fact that it can become a power issue between parents and children, especially if the money is attached to household chores. Parents also may feel pressured into increasing the allowance by children.

Generally, the guidelines for allowances are determined by family attitudes and values. Regularity is important if you are using allowances as a teaching tool. This may mean twice a week for 6-8 year olds, weekly for 9-12 year olds, every other week for 13–15 year olds, and monthly for 16–18 year olds.

You and your child need to decide together what he or she is expected to purchase out of that allowance. Does it include money for lunches? School supplies? Clothing? You may also want to help your child learn how to save some of the allowance for a large purchase he or she wants to make in the future.

When both you and the child work out a plan, it helps the child realize that there are choices and brings the child into the decision-making process. This might make it easier to say “no” when they are out of money before the next payment time arrives.