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June 2010

Should you give your child an allowance?

by Rona Birenbaum  |  6 Comments

I was having coffee with a friend recently who has three beautiful daughters age 6 and under. She asked me when I began giving my soon-to-be 11 year old daughter Rachel an allowance.

Now, there are many philosophies on the subject, and sharing my own is not meant to be prescriptive. I do find, however, that people tend to be interested in my personal money decisions given that I give so many people financial advice. (yes, I practice what I preach!).

My daughter started getting a weekly allowance about 3 months ago. Here is how it happened:

I was preparing dinner after work and she was doing her homework at the kitchen table. Out of the blue she said, “Mom, when can I get an allowance?”

Me: “Why do you ask?”

Daughter: “Well, my friends get an allowance.” (bad answer)

Me: “What would you spend an allowance on?”

Daughter: “hmmmm, well, birthday presents and mother’s day and father’s day presents. Stuff like that. (good answer!) And I will do chores around the house.”

Me: Rachel, your responsibilities at home are yours whether or not you get an allowance. Everyone in the family pitches in, even though we don’t get paid for it. That will not change. Dad and I will discuss this and let you know.

We did discuss it, and neither of us have anything against giving Rachel an allowance. She has learned the value of money over the years and when she has received gifts in the form of cash, she hands over most of it for her savings account. So, having a little spending money for presents etc. will get her used to making buying decisions.

We surveyed a number of parents and found out that the going rate within her group of friends is $5. Wow, when I was a kid it was 50 cents! But back then, I could buy two chocolate bars for 50 cents.

So, how is it going? Pretty well I think. She has made a couple of purchases, but has also been saving. Just this weekend she mentioned that she is saving up for a laptop. Good thing they get less expensive every day!!!

Feel free to share your allowance stories. I’d love to hear them!


  Jun 21, 2010 12:04PM

My wife and I discussed this idea years ago. When each of our children started grade 1 we began giving them an allowance. The amount was equal to their age each week. It seems to have worked - my older one is 13 and in addition to her allowance, worked part time walking dogs until she saved enough money to buy her own puppy. <y youngest has now saved over $1000 between allowance and birthday/holiday money. She wants to buy a house with the money.  

  Jun 21, 2010 12:49PM
Rona Birenbaum

What a wonderful story and such fantastic results!

I'm wondering if your children are natural savers or if they received coaching/guidance from you and your wife.  I often wonder how much of our money styles are nurture vs. nature.

My guess is that like most things, both nature and nurture play a role.

Thanks for your comment,


  Jul 27, 2010 18:35PM

In my family, we decided to handle allowance using a 'three jar' approach ... savings, spending and charity.  My children (now 15 and 11) are so used to this that they think it's a completely natural way to organize their money ... and even within a $5 allowance, there is an agreed on percentage that goes into the charity jar.  Trips to the bank to put  the savings in, and using the spending jar for the little things, have all given the kids a sense of empowerment and plea...

  Jul 28, 2010 18:12PM
Rona Birenbaum

That sounds like a super strategy and the fact that it has become habit must be very rewarding. Your approach teaches two very important money management fundmentals.

  • One is the need to make choices and prioritize.  In other words, you can't have/do everything and some things just have to wait until you save up enough for them.

  • The second is the idea of having a finite amount of money to work with.  Without a fixed allowance and the responsibili...

  Sep 07, 2011 15:24PM

We decided to give the children an allowance once they all started doing chores around the house as scheduled:  ie. dishes, cleaning cat litter box etc...  Wether we are a family or not, and chores must be done, the basic work ethic should be formed at home first, in that we all earn money for a job well done (or at the very least) consistently done.  Later on, they learn to apply this to life and realize that money "doesn't grow on trees" as the saying goes, and they...

  Sep 07, 2011 17:25PM
Rona Birenbaum

Hello Stormy,

Yes, the "money doesn't grow on trees" message is a really important one.  There is a temptation for the Boomer generation to spend lavishly on their children in response to the financial limitations their parents had when raising them.  As a result, there are many young adults that haven't yet become financially self sufficient and don't have the tools to do so.

Giving an allowance for the "extras" that a child wants helps teach the...

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