When and How to Give Your Child an Allowance

Ever get sick and tired of your kids asking for one more thing?

Ever feel taken for granted because your kids don’t appreciate all you do and buy for them?

Ever wish your teenager was more responsible with money?

Ever wish your children had a little more patience and would stop expecting things to happen RIGHT NOW?

If you answered yes to any of these questions, my advice to you is give them an allowance.

Having an allowance will teach your children how to manage, use, save, and value money and develop delayed gratification. Growing up with an allowance will insure that your children manage their own finances responsibly. When children have their own money to spend, they quickly learn the value of what they spend it on. A tempting toy that breaks the first day becomes a lesson in quality. Parents and ATMs are no longer considered or available as an endless supply. Children and parents no longer spend useless time arguing over money and buying.

Giving children an allowance sends a message of trust in the child’s capability. Most important, a child who is raised responsibly with an allowance does not blow it financially after leaving home.

When do I start an allowance?

This depends on your child. We started giving our son a quarter a week when he was five or six. He had no idea what it was for and never remembered it. We stopped and started again when he was eight. Our daughter was piling pennies as a toddler so we started hers at five. By the time she was seven, she bought herself an American Girl Doll. When she was thirteen, she paid for a $1700 violin.

How much do I give?

This is completely personal and depends on what you expect your child to pay for. When our children were little, allowance was for toys and treats. I always bought their clothes but when they were older, they could add to the money I agreed to spend if they wanted the more expensive items. When they went out with friends, their allowance covered movies and snacks.

Some parents give allowance in two or three segments: 1) spending money, 2) savings account, and 3) charitable giving. Spending money is just that. They must be allowed to spend it on whatever they want in order to learn its value over time. When they blow it on candy, they have nothing left for that toy or video game. When they beg for more money, you can say, “You’ll have it with your next allowance.”

When the amount is decided on, be very clear what it is to be used for so your child is clear and battles can be avoided. If it is to cover all treats and toys, allow your child to blow it all and then empathize and acknowledge his disappointment and anger when you say that next time he can save up to get what he is begging you to buy now. In this way, allowance is a great teacher of boundaries.

Is that all they should get?

It’s a good idea to give your children the opportunity to add to their savings by paying them for irregular jobs around the house like raking leaves, cleaning the garage or bathroom, having a lemonade stand. My daughter loved a job she had piling bricks for a penny a brick. We paid for our children’s school lunches each week and they decided whether they wanted to buy lunch or make their own and save the money.

When they complain that they’ll never have enough money to buy x, y, or z, you can suggest extra jobs. As they get older, they might rake leaves for the neighbors or sell some of their old toys at a yard sale. Extra money given for birthdays or holidays always adds an encouraging boost.

What if they never save any money?

When they beg for that game “everyone else has”, the unnecessary accessory, the toy they will die without, that is your cue to encourage savings—unless you give the needed money to avoid a meltdown or disappointment. Acknowledge how hard it is when you don’t have the money for something you want, share a story of your own, and ask your child if she would like your help to save up at least part of her allowance each week. Help her figure out how long it will take and mark it on the calendar. Extra jobs can speed the process but in today’s world delayed gratification is a most important lesson. The pride experienced when your child finally has the money and makes the purchase herself is worth every ounce of patience.

Do I withhold it when they don’t do their chores?

Allowance should never be tied to chores. When allowance becomes a reward for chores, it loses its teaching value. If it is a reward, it is also a punishment when the chore is not done. This is territory for feuds and resistance. An allowance is for learning the value of money.

Regular jobs are expected because the child is an important, needed member of the family team. Chores can change and should be decided on together but should have no connection to allowance. Allowance should be given regularly each week or month regardless of the child’s performance or behavior for its true lessons to sink in.

But why should I just hand over money to my child for nothing?

Giving your child an allowance is like giving your child swimming lessons. Learning to swim means he can be safe in the water. Growing up with an allowance means he learns to be safe with money.