August 25: Some Thoughts on Allowance

Over the years that I have been in practice, I’ve had many conversations with parents about when and how to implement giving children an allowance. As with so many topics in parenting, there is no single ideal way to manage providing a child with pocket money. Rather, please consider the suggestions presented here in light of the age(s) and temperament(s) of your child(ren) and work to make a plan that matches your family’s values and goals. Keep in mind that there are many ‘right’ ways to do this and what works for your cousin, your neighbor, or for a parenting influencer may not be a fit for your family.

When should parents introduce allowance? If you have not already done so, the beginning of kindergarten can be a logical time to start giving your child an allowance. If your child is already in late elementary school and you have not been offering a regular allowance, please don’t panic. The beginning of a new school year is a logical time to introduce allowance for children of any age.

Parents often wonder whether they should tie allowance to completion of chores. My preference is for parents to separate allowance and doing day-to-day jobs. The message is: in this family we all pitch-in to help run the household. We also provide some money for you to spend on things that you want. That said, if you have a child who is seeking to earn some extra money, you could consider creating a list of ‘above and beyond’ jobs for which your child can earn money, perhaps one-off activities such as helping to wash the car or clean out the garage. If you are interested in reading more about organizing family jobs and responsibilities, here’s a link to one of my previous newsletters that provides a whole host of strategies.

Another question that parents often ask is whether their child should be able to buy whatever they want with their allowance. It is reasonable for parents to set some boundaries around how allowance can be spent, particularly for school-aged children and tweens. For example, I know families who have the rule that allowance can’t be spent on candy. Other families don’t allow toy weapons in their homes and set a boundary that children are not allowed to buy toy weapons with their allowance. Clearly this topic becomes more complicated once children are in high school.

Parents of younger children sometimes wonder why a child needs weekly spending money when all the essentials in their lives are provided for them. Providing children with some agency and the ability to pay for something that appeals to them is a way to help them start to make decisions regarding the value of money, learn about cost versus benefit when making purchasing decisions, and get a sense of how it feels to delay gratification by saving their money to make a larger purchase versus spending money in the moment at a point-of-purchase display. It's very helpful for caregivers to set clear boundaries around when and where a young child can use their allowance. For example:

• “We’re going on an errand to the pharmacy. I’m just picking up medicine – I’m not planning to make any extra purchases on this trip. If you think you might see something you want to buy, you can bring your allowance.”

• “We’re going to the store after school, but it’s just a quick trip. We won’t have time to do any shopping, even for things you want to buy with your own money.”

  
  

As children get older and become more independent, perhaps going to the mall with friends or meeting friends for pizza, it’s helpful for parents to communicate clearly about which expenses will be covered by caregivers and which expenses a child should budget for and plan to cover with their allowance. Consider your own value system and comfort level as well as your child’s temperament and the norms in their social group as you decide whether and how often you will simply provide funding for an individual outing or if you prefer to increase your child’s allowance as they become more independent with the expectation that they will budget for themselves (with adult support) and cover their own after school snacks or food purchases when they go out with friends

Some families choose to make a plan in which the total amount of allowance given to a child each week is divided into different buckets such that a child saves a certain amount of their allowance each week, sets aside a certain amount for philanthropy, and keeps a specified amount for themselves. It helps to have clear rules about what the allowance allotted for savings can be used for. If your idea is that your child is starting early on saving spending money for college and your child’s idea is that they are saving up to buy a Nintendo Switch, it will be important to reconcile those differences. With the money set aside for philanthropy, you can pick an interval – perhaps quarterly, bi-annually, or annually, and help your child identify one or more organizations they would like to donate to based on their own values and beliefs.

Running a household takes a lot of mental bandwidth. If you are one of the many parents who finds it difficult to remember to pay allowance at regular intervals, I recommend making use of technology to help you remember to give your child cash or to add money to a cash management app or online account. As with so many subjects that I write about, there is so much more to say about this topic. I hope these ideas and suggestions provide the jumping off point for some helpful conversations.