08 July 2016
Should Your Kids Receive an Allowance?

If this question hasn’t yet come up in your household, it will eventually. Your kids will start asking about getting an allowance when their friends start getting paid for doing routine chores like clearing the table after dinner or running the vacuum in their bedrooms.

There’s no real consensus among professionals on the topic of allowances because there are good reasons to give your child an allowance and good reasons not to.

Of course, as the parent, it’s your decision, but there are pros and cons to consider when deciding whether to give your child an allowance and if the allowance should be tied to the performance of chores and other assigned activities.

Why Should My Child Receive an Allowance?

Some parents think an allowance is a good learning tool, for a variety of reasons:

  • If an allowance is payment for work, it establishes early that money and work are related.
  • An allowance teaches good savings and spending habits if you’re consistent.
  • An allowance teaches basic budgeting skills: 50% in a savings account, 50% to spend any way your child wants.
  • Saving teaches the very tangible value of deferred gratification. If your son wants a car, create a budget that allocates money each week to a savings account with a car as the incentive to save.

Money management is a necessary skill to master as we move up the success ladder and manage more and more money. However, does an allowance send the wrong message to your child?

Why Shouldn’t My Child Receive an Allowance?

You got an allowance, so naturally you assume your child should get an allowance. However, many experts believe that an allowance sends the wrong message. Here’s why:

  • Children shouldn’t receive an allowance tied to chores; their chores are their contribution to a smooth running household.
  • You already give your child money for everything from a new sweater to a new favorite toy.
  • How does the child learn to respect money when it comes so easily?

Structure a Money Management Program for Your Child

There are plenty of reasons to give an allowance and not to give an allowance. What works best for you is based on the way you run your household and raise your children. Here are some options:

1. No allowance, but the child is assigned chores just like all members of the family. They learn to be contributing members of a social group – the family. If the child wants money for something, let them find ways to earn it. This will teach them independence and entrepreneurial skills.

2. Give your child an allowance and make it clear that it is a payment for chores.  No work, no allowance. After missing a few allowance payments, your child will start to understand the relationship between work and payday. You work, you get paid. Don’t work and don’t get paid.

3. Give your child an allowance and use it as a way to teach money management skills. Don’t tie allowance to chores or behavior. Don’t withhold an allowance payment because of bad behavior or failure to do chores; use some other method of punishment, like taking away TV privileges. The allowance will still be there, because it’s a valuable teaching tool.

Teach Money Management

Let’s say your son gets $4.00 a week allowance. He can spend $2.00 any way he wants. Then, $1.00 goes into the savings jar to save up for a big item (deferred gratification and self-discipline) and $1.00 goes into the giving jar – the money your child sets aside to help others. Few schools teach the importance of compassionate giving, and parents are in the best position to teach this valuable lesson.

The most important thing is consistency. Your son didn’t mow the lawn, no gas money for the car. Consistency demonstrates your resolve and teaches your child what to expect on payday.

Don’t fall for the “advance on next week’s allowance” argument. Your mortgage lender won’t give you a break like that. Teach an important lesson, even if you feel guilty when you say “no.”

Parents are the best financial-skills teachers kids have. Whether or not you give an allowance, whether or not you tie work around the house with payment on Friday, your child will learn the most valuable money management skills from you. This can also be a reminder that you, as a parent, should be a good example when it comes to managing money. If you consistently run out of money before payday, what message are you sending your child?

Teach your children the value of savings as youngsters and they’ll thank you when they own their homes and are raising their own families. Someone has to teach money management skills, and it’s not likely to be a subject taught in school.

Visit your local bank branch to open a savings account for your child to provide tangible evidence that saving for a big purchase is smart.


The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank, a division of ZB, N.A.


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