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Should you give your kids an allowance

Updated: Jul 12, 2023

Somewhere between half and 3/4 of parents give their kids an allowance. And payouts range from a few dollars a week to $20 or more. But should you?

Person counting money

An allowance can be a great way to introduce kids to money, but you should be clear about the reasons. Possible benefits of an allowance include:

  • Giving kids experience handling their own money to save and spend

  • Teaching kids the value of work

  • Rewards for accomplishments

  • More independence for the kids

For our family, our main goal with allowance was to give our kids the experience with their own money. We wanted them to learn to spend and save their money wisely. Regardless of how much they might make in their lives, this is a lesson which everyone needs to learn.


Doing chores and maintaining the house were part of everyone’s responsibilities and not included in any allowance consideration. When the kids were young, their level of chores was small, but as they got older they included most everything to help around the house including doing their own laundry, mowing the lawn, and making dinners. The kids never did the majority of the house chores, my wife and I still did most of the cooking and cleaning, but we wanted them to contribute and we wanted them to be prepared to maintain a house by giving them experience. We didn't link the allowance to chores, but there's nothing wrong if you do. Be prepared if they say they'd rather not do the chore and skip out on the money though.


We would occasionally provide monetary rewards for some accomplishments, but this was generally as a quick way to get the kids excited about something. Ideally, any accomplishment should have a more intrinsic value than money.


Since chores weren’t a means to earn income and we only rarely paid money as a reward, we focused our allowances on the goal of teaching about responsible money use. We began with a weekly allowance and required that they divided it up between needs (savings), wants (spending), and sharing (charity). Honestly, with both of us working and three kids, we fell behind on our allowance payments. Making it to the bank to take out money took time and we soon stopped paying out weekly.


We didn't want to lose that opportunity to provide our kids with a financial experience though. So we settled on more infrequent but larger amounts of allowance payments. This worked well as they often received enough money to be significant if they spent it all, but we continued to stress placing some away for future needs. Receiving larger payments is easier on us as parents and also more similar to how they will receive paychecks in the future. With each payment, they need to allocation some for needs, wants, and sharing.


Holding back allowance as a punishment for not doing chores or bad grades is certainly an option. But since the goal of the allowance is to teach them about spending and saving, holding it back reduces that learning. Personally, I’d keep paying the allowance unless it was an egregious infraction or there were other reasons to withhold it.


Of course you needn't pay an allowance at all. But you do want to give them experiences with handling their own money. So perhaps they could do chores for neighbors (walking a dog, pickup up leaves) or use any monetary gifts they receive as opportunities to teach about needs, wants, and sharing and how to save up for big purchases. You can also include your kids on some of the choices you make when paying for things. Talk about where you might go on vacation and the cost differences. Show them the receipt from the grocery store and talk about the choices you made. Good money habits start with being comfortable about money and talking about choices.


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