By CFPB and FDIC
Giving children an allowance is a topic many parents discuss. Even within families, parents can disagree about whether it’s a good idea.
Research doesn’t conclusively prove whether or not having an allowance helps children achieve better financial well-being as adults. However, research does suggest how to make an allowance work well for your children, if you do decide to give one.
Don’t just hand over the money and leave it at that. Make it part of your conversations. Talk about what the family budget still covers. For example, you can clarify that the child’s meals with the family, school clothes, and school supplies are the family’s responsibility. The child’s own expenses, like clothes he wants to buy or apps she wants to add, should come from the allowance.
If you give the allowance weekly, check in each week and ask about what the child decided to do with the money. Did she save any of it for a future goal? What did he learn about spending, saving, or planning ahead? Does she want to make changes to how she spends money next time?
Some families decide to pay children for certain chores. If this sounds like your family, you can have similar conversations about what your child earned.
Whether to give an allowance at all is a choice each family should make. To make the most of an allowance if you choose to give one, commit to giving your child some of your own time and guidance along with it.