Should children get an allowance?

Should children get an allowance?

The Short Answer Is YES!

ALLOWANCE: Training wheels?

It’s A Family Affair!

I recommend the pay-for-routine-chores allowance system. Of course, certain chores like cleaning your own bedroom and picking up after yourself, should be unpaid and considered family “member” chores. In my household of three children we had the Sanitation Engineer, the Ranger and Sous Chef. The specific tasks for each role were on a card in a pocket on a wall chart. Tasks rotated each week. At our weekly family meetings the children had an opportunity to vote on any proposed changes to the chore system and house rules. We all took turns chairing the family meetings but Momma had the extra vote in a tie! Before initiating an allowance system, take into consideration your child’s readiness to comprehend the concept of an ‘allowance’.

Do they have the self-control to not spend it all at once? Are they capable of understanding the need to save some of it? If not, they’re probably not ready for an allowance.

A 2012 survey by the American Institute of Certified Public Accountants (AICPA) found that 61% of parents give their children allowances, most starting by the time children reach age 8. The average allowance over all age groups is about $70 per month. That may sound like a lot but it’s under $18 a week. Some families pay $1.00 for each year of age of the child.

Use Allowance To Teach Budgeting

What children should be required to pay for from their allowance varies by age level and the amount they receive. I’ll be covering that topic in another post but suffice it to say as children get older, use their allowance to model and teach them sound money management. Their allowance and any earned money should gradually become their entire budget—for entertainment, for music downloads on iTunes, for gas and after school eats.

It will soon become clear they must prioritize their wants and needs to stay within their budget. Ask them to keep track of each penny they spend for a month. Make a pie chart of their expenditures with categories such as entertainment, food, clothes, electronics and maybe extracurricular expenses. Discuss with them how and where they might cut expenses to stay within budget. It’s no fun when your car runs out of gas and you have to walk home form the football game on a cold night.


Children who received unconditional allowance, no chores required, had the lowest rates of financial literacy as well as a poorer work ethic according to the 2000 Jumpstart Coalition Survey entitled “Improving Financial Literacy—What the Schools and Parents Can and Cannot Do.” And that makes sense, why work if someone will simply give you money!

Create Fun Activities

The purpose of an allowance is to teach children how to manage their money and budget for future purchases. Simply giving children an allowance will not teach them the money management skills they need for a secure future. Parental interaction and guidance is required.

A good way to help them understand you can’t have everything you want is to take them grocery shopping with you. Create a shopping list and an approximate budget for what you want to spend. Add up the cost of your purchases as you shop and do a lot of brand price comparing. When your child wants something not on the list, ask him/her to suggest what can be put back on the shelf to allocate enough funds for the alternative purchase.

Even young children can benefit from participating in the monthly bill paying process. It may be news to them that you have to pay for you and them to live in your house! Paying your credit card bill is a great time to explain credit, interest and debt to them. What, you have to pay a company every time you use a piece of plastic for money? Why? Developing your child’s financial literacy should be an ongoing experiential adventure in your household!

Vacations cost money!

Saving Is The Foundation Of Financial Literacy

Most parents surveyed reported their children saved less than 1 percent of their allowance. Saving is the foundation of financial literacy. A lifelong saving habit can be one of the greatest gifts a parent can bestow on a child, but it takes work. It’s that parent interaction again that makes the difference!

As soon as the allowance is awarded the child should be “helped” to put 10 to 15 percent into his/her savings account for future emergencies or necessities. The trip to the bank may be through the piggy bank or School Savings™, the national bank-at-school program, but the money needs to be put into savings as soon as it’s received or it is gone forever, it appears.

Declaration Of Allowance

So if you’ve decided to give your child an allowance, put on your family planner hat and start thinking of all the ways it could be implemented and abused! What tasks will the allowance system include? What will the task division look like? Will there be a deadline by which the tasks have to be performed? What happens if all the assigned tasks are not completed? What happens if they are not done well? Will the kids be paid on a per task basis or on a project basis? When and how will payment be made? Is there a penalty if your allowance payments are late?

To make everyone’s life more pleasant, I recommend writing down the allowance rules and having each family member sign the Declaration of Allowance! Be comprehensive. It will avoid much weeping-and-wailing-and-gnashing of teeth when your teenager can’t leave the house Saturday until all his chores are done. An app called iAllowance might be worth a test run to see if it can help you organize your allowance system.

Cons Of Allowance

Just so you are informed, there are a few people who think children should not be given an allowance. Their reasons are as stated from this Quicken Loans article which also reports the Pros of allowance.

  • An allowance may undermine the importance of contributing to the family. Your kids may get the perception that duties always deserve a reward instead of simply doing their share for the family.
  • Paying kids for doing chores teaches them that working for money isn’t always fun.
  • Kids may not be motivated to do their chores when they don’t need the money or they have saved up enough.
  • It may be challenging to give an allowance if you are on a small budget but have a large family.
  • An allowance may open the door to kids making poor financial decisions when spending their money

Please share your tips and advice on teaching money management skills with other parents by leaving a comment. All comments are screened for appropriateness.We look forward to hearing from you!

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