Category Archives: Budget

Should You Give Your Kid an Allowance?

A question I get asked frequently by parents who call my show is, “Should I give my child an allowance, and if so, how much should I give them?” Here are my thoughts…

According to one study, the top reason parents give their children a weekly allowance is to minimize the time they have to deal with them. “Here’s some money, now leave me alone” is about as far as most of the so-called teaching goes.

However, allowances are important because they teach kids at a young age the very valuable lesson that you must earn the things you have.  The more your kids learn a sense of earning, the more they will respect money, the more they will respect themselves for earning it, and the more control they will have over their lives in the future.

Giving your child an allowance also teaches them about budgeting.  Kids who aren’t brought up with a sense of saving tend not to do well in their 20s.

I think a basic allowance should be based on your child’s age.  If they’re 8 years old, they should get $8; if they’re 15, they get $15, etc.  Now, what can your child do with $15?  Not a whole lot, but it’s the beginning of teaching them something about money and controlling impulses.

An alternative is to give older teens (15 or 16) a couple hundred dollars a month, and out of that they have to pay for everything: school lunches, their cell phone bill, any clothes they want, etc.  If they want something bigger than that, they will have to go out and earn money and/or do more chores.

What about using money as a disciplinary tool? My thought is that when you take something away from a child, he or she has to earn it back. Just taking away their cell phone, for example, doesn’t really get through to them because they know they’re eventually going to get it back.

However, if they have to earn it back, it completely changes the way they look at it.  If they’re late paying their phone bill, the service gets cut off. They really need to learn how to keep up with taking care of their responsibilities. Sit down with your child and say, “These are the things that are gone, and this is how you have to earn them back” (e.g. good behavior, good deeds, mowing the lawn, etc.).

When talking to kids about allowances, you should mostly discuss impulse control.  And that’s where you as the parent come in as a role model.  Do you have impulse control, or do you just irresponsibly spend?

Every moment is a moment to teach your child. Don’t miss out!