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  • Writer's pictureDr. Luisa Bryce

Kids and allowances: To give or not to give?

Many parents struggle with decisions about how, when, and if to give their children allowances. While there is really no one correct answer to each of these questions, there are some great opinions and research on this topic. As a child psychologist, I support giving children an allowance; it can be a valuable parenting tool if done effectively. Below I explain my reasoning for allowance giving and provide answers to some of the common questions parents often ask me:

What’s the purpose of giving an allowance?

Allowances provide children with valuable educational tools. If your children have access to their “own” money and experience managing that money, they’re more likely to be have to tools to handle money effectively as adults. Practice makes perfect, right? What’s more is that children tend to be far more frugal in spending their own money as compared to spending their parents’ money. As cliché as it sounds, giving your children an allowance will help them understand the value of a dollar.  For example, if little Sarah wants a doll at the store that costs $20, she may think twice about her purchase if she has to count out her own quarters and dimes, as opposed to the swift swipe of Mom paying with the credit card.

When should I start giving an allowance?

Kids begin to understand the general concept of money in their preschool years, but complete understanding isn’t usually developed until around kindergarten. Therefore, kindergarten is usually a good time to start (age 5-6). If you want to be sure your kids get the concept of money before starting to give them an allowance, give them a “money test”. Ask them questions like “How much is a nickel worth?” and “How many quarters in a dollar?” Children can usually begin to understand the concept and benefits of saving money around age 7-8, though many kids may be motivated to save at an earlier age, especially if they’ve been eyeing an expensive toy.

As far as the frequency of providing allowances, weekly is a good time interval as it’s easy for you to keep track of and easy for your child to understand. I recommend giving an allowance on the same day of the week around the same time (e.g. on Friday after dinner). You can even use a visual aid, like a calendar, to help younger children grasp the concept of time. Additionally, giving smaller amounts of money at shorter intervals (weekly versus monthly) is generally more reinforcing.

How should I give my kids an allowance; should I make them earn it?

Parents and experts alike tend to have different opinions on this topic. Many agree children should earn their allowance through chore completion, as it provides them with the “work for money” experience around which our society is based. Others argue children should complete chores without getting paid because it’s part of good parenting and learning how to contribute to the family without a monetary reward.

I tend to take the approach of advising parents to provide their children with a small weekly allowance- regardless of whether they’ve earned it, while at the same time maintaining expectations around completion of chores and helping out around the house. Children can then earn more money for completing larger, out-of-the-ordinary household tasks. If children are given an allowance, they should also be expected to buy some of their own toys rather than parents shelling out the cash. Regardless of what you decide is best for your family; consistency is key (e.g. you need to keep track of chore completion and provide allowance at the same time interval). Additionally, it’s important to allow kids (especially very young children) to make mistakes with their money rather than trying to control how they spend it. As your children get older (around age 10), have a conversation about options for allowance allocation (e.g. short-term spending, saving, giving to charity, investing, etc.).

How much allowance should I give?

How much to give is truly a personal decision specific to your family. Financial experts recommend giving your children only what you can really afford and “not a cent more”. It may be helpful to explain to your children that money is a family topic, and that other families earn different amounts money and have different values around money. Let your children know competitive discussions comparing allowance amounts with friends aren’t okay, and encourage them to talk to you about money.

Have more questions about allowances? Contact Dr. Luisa here.

Below are a few books I really like that help teach children about money:

“A Chair for My Mother,” by Vera B. Williams (Ages 4 to 8)

“Coat of Many Colors,” by Dolly Parton (Ages 4 to 8)

“Amelia Bedelia Means Business,” by Herman Parish (Ages 6 to 10)

“How to Steal a Dog,” by Barbara O’Connor (Ages 8 and up)

“Okay for Now,” by Gary D. Schmidt (Ages 10 and up)

“The Not-So-Great Depression,” by Amy Goldman Koss (Ages 12 to 15)

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