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Do you pay your child an allowance?

Should you give your kids an allowance?- Boy washing a car.

Our continued focus on kids and money during Credit Union Youth Month!

To allowance or not to allowance…. that is the question. Whoever you ask, you’ll get a variety of viewpoints on whether giving our children an allowance helps them become better money-managers. Some parents give their children a fixed amount each week, some give allowances for certain chores, and others don’t believe in giving any sort of allowance at all.

For instance, personal finance expert Dave Ramsey doesn’t recommend giving kids fixed allowances, but instead believes in paying “commission.” By paying at the completion of each task, children can control how much they earn, and see the immediate payoff of a job well done.

Allowance as a Teaching Tool

One study showed that while 90% of parents gave children an allowance based on chores, only 80% talked with their children about money management. As a parent, teaching them to be responsible with money should be just as important as teaching them responsibility in other areas of their lives.

An allowance gives you the opportunity to give your child some experience with money. It allows him or her to see how choices have consequences and plan for the future. And perhaps most importantly, it gives kids a chance to make mistakes while the stakes are relatively low. When their own money is at stake, they’ll quickly learn how to research the things they’d like to buy, and become more informed consumers. These lessons are far less painful when your child is buying a pair of sneakers or the latest toy craze, instead of their first car or home.

Learn the Basics, and Pass Them Along

Many of us are less vocal about financial conversations with our children because we’re not confident about money ourselves. If you need a little help, you can learn some of the basic financial concepts to teach your kids in this informative series of podcasts from Joel Chrisler, host of the Internet radio show Real Life 101.

Podcast: What Parents Should Teach Their Kids by Kindergarten

Podcast: What Parents Should Teach Their Kids by Middle School

Podcast: What Parents Should Teach Their Kids by High School 

Here are some other ideas for raising money-savvy kids:




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