Cincinnati Family Magazine

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April 18, 2024

All You Ever Wanted to Know About Allowances

Teach your kids how to handle money! Experts say an allowance is the first step.

Full781.jpgVery few teenagers possess the necessary skills to manage money. In fact, 50 percent or more of teens receive little or no guidance from their parents, according to the 1999 Report on Financial Literacy by the U.S. Securities and Exchange Commission.

Beginning at an early age, you can teach your children some of the skills necessary for them to develop into money-savvy teens and adults. Setting an allowance can be a good place to start.

Why Should You Give Your Child an Allowance?

Most children – beginning at age 4 or 5 – can begin to learn some of the basics of responsible money management through a regular cash allowance. What do the experts say? David McCurrach, author of Kids’ Allowances – How Much, How Often and How Come, A Guide for Parents (Kids Money Press), recommends allowances. “Children can learn from doing – and nothing will make more of an impression on them than their own successes and mistakes,” he adds.

Olivia Mellan, a money coach, money therapist, speaker and author of Money Shy to Money Sure (Walker and Company), agrees. “All children should be given an allowance to learn how to deal with money (effectively) – and at the earliest possible age,” she says.

Explaining Allowances

First of all, you should have a meeting with your children to set rules and expectations. McCurrach says to tell your kids that you are giving them responsibility for a portion of their expenditures (that is, “so much a week for snacks, toys, movies and the like and if they want any of these things, they will need to use the money you have given them.”).

Mellan recommends saying something like “I’m giving you an allowance to help you learn how to handle money – and how to use it well, to save and invest, spend and to give away to help others.” She advises giving a 6-year-old $3, for example, and dividing this amount among three different colored jars: one for spending, one for saving and investing (eventually he’ll get to pick a stock or two) and one for charitable giving (his choice).

Should Chores be Required?

Experts like McCurrach say “No” to the concept of paying an allowance based on the completion of specified household chores. He insists that basic chores, “such a making beds and hanging up towels,” must be a child’s responsibility since he should be a contributing family member. An allowance is an ineffective process in changing behavior if a child is not meeting his responsibilities. Loss of privileges usually works as a more effective approach, he advises.

McCurrach also notes that “paying for jobs around the house – such as washing cars or cutting the grass – is common practice and reinforces the values of hard work and personal initiative.” Mellan concurs, adding that “extra chores can be paid for, to prepare children for the world of work.”

There is some debate on this subject, however, and an alternative approach can be found on Big Change’s popular website ( Big Change actually encourages an incentive-based approach in getting children to perform basic chores.

What Dollar Amount to Give Each Age?

According to survey findings on McCurrach’s website (, weekly allowances average $3 for ages 3 to 5, $4 for ages 6 to 8, $7 for ages 9 to 11 and $10 for age 12 and older. McCurrach’s book provides the detail for these averages. In addition, nearly 75 percent of parents surveyed pay allowances on a weekly basis. There are no hard and fast rules, however.

“There is no rule of thumb if you’re going to use the allowance as a tool to teach your kids how to manage money,” says McCurrach. “It all depends on which responsibilities you give them and the amounts required for those responsibilities.”

Through an allowance, you can provide kids with valuable lessons in fiscal responsibility, such as saving for a goal or controlling spending. Additionally, you can teach family values, like delayed gratification or giving to charitable causes.

Mellan and McCurrach concur that “important habits can be developed by children at a young age.” Both experts insist that empowering your children with discretion on their financial decisions is a great tactic for success.

Michael O’Brien is a freelance writer.


The First National Bank of Dad: The Best Way to Teach Kids About Money
By David Owen
(Simon and Schuster)

The Kids’ Allowance Book
By Amy Nathan, Illustrated by Debbie Palen
(Walker and Company)

The Kid’s Guide to Money: Earning It, Saving It, Spending It, Growing It, Sharing It
By Steven Otfinoski

Neale S. Godfrey’s Ultimate Kids’ Money Book
By Neale S. Godfrey
(Simon and Schuster)

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