ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Financiation: The Good and Bad About Allowances for Children

Updated on May 22, 2011

The Good and Bad About Allowances for Children

Children and money. The idea about allowances started back around 1831, when Lydia Maria Child became a strong advocate for promoting family values and teaching children about money. (Lydia Maria Child came up with the poem “To Grandmother’s House We Go”) most child rearing experts believe children should get an allowance appropriate for their age and not related to the responsibility of doing chores around the house.

Helping kids to make wise decisions now will serve them well as adults
Helping kids to make wise decisions now will serve them well as adults

Financial experts believe allowances give children better skills at handling money. There is debate among others who feel that the allowance does not help children learn to manage their money. The proponents of allowances believe kids between the ages of 3-5 are ready for an allowance.

It is a tough decision about how much to give your child. Some believe a weekly allowance equivalent to $1 per age per week is sufficient. Some think that the allowance should be determined by what the parents think the children will do with the weekly allowance. It may depend on how much your children have to take responsibility regarding all of their spending.

If they have to buy their own clothes, and their own school lunches the allowance needs to accommodate them for these costs. If the allowance is just for their social spending, you need to consider how much independence you want them to have over free wheeling spending options.

Teaching Children Fiscal Responsibility

Part of teaching them fiscal responsibility will come from giving them more control over their spending choices. As a family, it is advisable to choose what the purpose of the allowance is, and use that as part of the determining giving factor.

Most child psychologists believe the allowance should not be tied to family chores. The idea of chores, these experts think, helps children learn to share family responsibilities. Also if you want them to continue to be doing chores around the house, as they get older, they may not be cooperative when they have other income that may come in from gifts or jobs.

Some parents choose not to give an allowance at all. As the child needs things, the parents pay for them. Children can still be taught enough about the value of money this way through the choices of how the money is spent.

It is important for kids to understand about money
It is important for kids to understand about money

The Great Allowance Debate

The debate rages on, with some experts believing that it is allowances that teach financial restraint to children. Giving an allowance, how much you give, and what it is used for is all personal family choices. Allowances or not, children need explanations about money so they can handle it properly in the future.

Ultimately It is what you teach your children, money itself can not teach children anything. Give your children, your time and patience, so they will have the confidence to handle money in a smart and educated manner.

Often parents think they can’t afford to give an allowance to their kids. If you want to give your child an allowance, but feel you can’t afford it, you really can. Think of the money you will give your children as an allowance as the same money you would be spending on them. The only difference is that, they are spending the money instead of you. As long as you are guiding them, the money won’t be spent on needless items. You will be using the lesson of an allowance as a way to share your thoughts and values about money with your child. This is what is important for them to learn.

What Do You Want Your Child to Understand About Money?

One of the biggest misconceptions about an allowance is that some parents cannot afford to give their children "extra" money. However, if you look at an allowance from a different angle, every parent can afford it. An "allowance" is basically money that you're going to spend on your child anyway, just given in a different form. Instead of paying for things at the time your children want them, you pay them an allowance and let them decide how to spend the money. The ultimate goal of an allowance is to teach children to distinguish between needs and wants and to prioritize and save--a difficult lesson that will be needed throughout life.

Age Appropriate Tips

Whether you give an allowance or not, here is some age appropriate tips to help them learn about money:

For ages 3-5 years old you can start to teach them about coins and their values. Help them recognize how much money each coin represents. Your discussions could be about what we do with money and how money buys things

5-6 year old can be introduced to savings accounts, what it means to giving to charity, and how money is used to pay bills, etc.

7-8 year old can be taught about managing money. They can learn how to divide their money into saving, charitable donations, and, and things they want to spend money on.

9-12 years old can be given more responsibility over what they do with their money. Some can be given the freedom to buy their own clothes, go to the movies, and other msc expenses, kids of this age have.

In the teen age years. your child should have the freedom to make their own choices, within limits, about what they will choose to buy. As they approach the age of working, you want them to be money mindful, so they make judicious financial choices. It is important to give your child autonomy on spending at this age.

It is Better Your Child Makes Mistakes with Money When You Can Teach Them

Sometimes, the best way to teach kids about money is to let them make their own mistakes, and good decisions. It is important to teach kids to save money and to also make good buying decisions. It might be a good opportunity to set up a bank account to encourage kids to save and put money away. To encourage your child to donate some of their money, help them pick out a charity that interests them like the local pet shelter. If they don’t donate money, perhaps they can donate their time, if they are old enough.

Your decision has to work for you and your family. It has to be a good fit for it to work effectively. You must think about what works best for you. Whatever you decide, be sure that the family as a unit makes a decision that works for them. If an allowance is connected to household chores, set the rules for what your expectations are and be clear about the consequences are if they are not done. Consistency is very important. If you give chores, pay them as you agreed. If you give them an allowance, be sure you give it to them regularly on the day promised. Be the best example you can be for your children in many ways.

Teaching Your Kids About Savings


    0 of 8192 characters used
    Post Comment

    • toknowinfo profile image

      toknowinfo 6 years ago

      Hi Create, Welcome to HubPages. I am glad you found my hub helpful. Thanks for stopping by and commenting.

    • CreateHubpages profile image

      CreateHubpages 6 years ago

      I appreciate your age appropriate tips toknowinfo. This gives me an idea how to talk to my kids about money with limitations of course.

    • toknowinfo profile image

      toknowinfo 6 years ago

      Hi PK, Kids need lesson from us about many things including the value of money. Allowance or none, our children need our time and energy to truly understand what we are trying to teach them. Thank you for sharing your story. I am glad you found this hub helpful. It is important to teach our children to give to those less fortunate. There are many values of money including giving to charity.

    • toknowinfo profile image

      toknowinfo 6 years ago

      Hi Jojo, I am so happy you stopped by. Thanks for commenting and I am glad you found this hub helpful.

    • PK2010 profile image

      Anthea Kwaw 6 years ago from United Kingdom

      Hi toknowinfo, interestingly I have never given my children allowance. I have always toyed with the idea, but have never got round to making this thought a reality. On the other hand I thought if their needs are met is there really a need for allowance? I talk to them about money and learning how to be handle this medium responsibly, especially as I have been burned quite badly from mishandling my money. Its funny I should read this hub today, because I was talking about spending wisely and not on a whim with my son today, who decided to spend everything I had given him from what was left over from an outing he attended over the weekend. I explained to him the importance of spending a little and saving for a rainy day. Initially he didn't want to see things from my perspective, but he eventually succumbed and saw the wisdom in my words.

      I like the fact that even though you have mentioned that getting an allowance teaches the child to be financially responsible, you have also recommended donating some to charity. Its a great addition and I believe that will teach the child to think about those who could do with the help of an extra kind loving hand. Great hub and great suggestions.

    • jojokaya profile image

      jojokaya 6 years ago from USA

      Great tips

    • toknowinfo profile image

      toknowinfo 6 years ago

      Hi L.L., It is so important to teach kids about fiscal responsibility. Thanks for adding your comments. I am glad you stopped by.

    • L.L. Woodard profile image

      L.L. Woodard 6 years ago from Oklahoma City

      Perhaps because it is the way I was raised, but I too believe an allowance should be tied to chores or duties. Part of fiscal responsibility is understanding that if you don't go to work, you don't get a paycheck. That is my thinking anyway.

    • toknowinfo profile image

      toknowinfo 6 years ago

      It really is interesting to read about each person's style and thoughts about allowances. I never gave my kids an allowance. But I taught them about being financially responsible. As teens they earn their own money and pay for the things they want. Allowances or not, it is the time we spend with our children and the values we teach them that count most.

    • susannah42 profile image

      susannah42 6 years ago from Florida

      I always give my kids allowance,but they must do chores and save some of it.

    • kashmir56 profile image

      Thomas Silvia 6 years ago from Massachusetts

      Hi toknowinfo, i agree with dahoglund, kids should have to do chores in order to get a allowance .

    • dahoglund profile image

      Don A. Hoglund 6 years ago from Wisconsin Rapids

      I think the allowance should be tied into doing some chores.

    • amillar profile image

      amillar 6 years ago from Scotland, UK

      That's a good idea. The sooner they learn to manage their money the better.

      Up and useful.

    • chspublish profile image

      chspublish 6 years ago from Ireland

      I like your age appropriate tips, very useful guideline.

    • b. Malin profile image

      b. Malin 6 years ago

      What a Wonderful read Toknowinfor you've covered all the Bases and then some. Interesting Ideas...and yes, experience is the best teacher for both parent and child...well worth passing on.

    • profile image 6 years ago

      TKI - like the way you research this. I'd say anything that matches the real world makes sense - I would have thought the debate would be in the area of how much and probably landing on $1 per year of child's age is easy to remember but for the very rich this would probably be irrelevant as the child is given an expectation of abundance (as opposed to scarcity) and therefore expects this later in life and marries accordingly! - a form of child rearing! But what I really liked here was you mention charity - trually amazing - something not often included in a discussion of allowances. You do great work TKI.

    • Cogerson profile image

      Cogerson 6 years ago from Virginia

      Great advice...I am actually already doing some of your suggestions with our 4 year old daughter Sam, and she has done a great job of learning...voted up and useful....thanks for sharing

    • WillStarr profile image

      WillStarr 6 years ago from Phoenix, Arizona

      I think she said $1 per age per week. Therefore, a 13 year-old would get $13.

      My allowance years ago was strictly for fun. There were no strings attached, except knowing that when it was gone, there would be no more until the next week. I really enjoyed it and rationed it carefully. It bought me many balsa wood model airplanes, and candy now and then.

    • drbj profile image

      drbj and sherry 6 years ago from south Florida

      Wow, tki - a weekly allowance for a child of $1 per week? That's generous, especially when I only got a pet rock each week.

      Of course, that was back in the Pleistocene Age and all we had were lots of rocks.