CHILDREN AND ALLOWANCES

 By Nina Chen, Ph.D.
Human Development Specialist

Do you give your children allowances on a regular basis?  Not every family gives children a regular allowance. Some families give children money as needed. Others give children allowances as part of family life.  Parents who choose to give their children allowances regularly believe that children can learn how to manage money and appreciate the value of their hard-earned dollars.

Managing money needs to be learned and experienced. Giving children a lecture about how to handle money is not enough. Children need to learn and experience it. It’s a long learning process.  Parents can begin to teach their children to understand the units of money. Counting money can be a challenging skill and usually is difficult for young children until about the third grade.  Parents also need to teach children to understand that we need to pay for something from a store and it is not right to take something from a store without paying for it.

How do we know when children are ready for allowances? When children can recognize the units of money, are comfortable with counting and numbers, and have spending opportunities, they are ready to handle an allowance.  If you give your 4 or 5-year old child an allowance, it is likely to have less educational value. When children start to ask for money for toys or other things, they may be ready for an allowance.

When you decide to give your children an allowance, you can negotiate with them about the amount of the allowance and what it will be used for.  This process can help your children learn responsibility. This process should be an ongoing process for parents and children to communicate values about good and bad spending, saving, and responsibility

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