The Pros and Cons of Giving a Child an Allowance

Written by , March 25, 2013

The Pros and Cons of Giving a Child an AllowanceStarting to raise a child will involve a number of changes to your financial world. Your budget will change, your spending priorities will change, and your long term financial planning will change as well.

Another aspect of your financial responsibility towards your children is teaching them about money and personal finance. There are different techniques for doing so, but many parents have found that a direct approach – actually getting children to make financial decisions for themselves – is the most effective. This has traditionally been done by giving the child an allowance each week or month.

Here are some pros and cons to doing so.


  • Teach Financial Responsibility Through Choices. When a child needs to make his or her own decisions when it comes to whether to spend or to save, they’ll begin to view money differently. When parents simply pay for things it’s easy for a child to view money as an abstract concept. But when the child has their own money, they’ll quickly learn that finances are always limited, and that they have to make choices how to spend. The earlier you teach your children about saving money the better prepared the child will be for making good decisions in adulthood.
  • Develop a Work Ethic. While it’s not necessary to tie an allowance to performing chores around the house, many parents choose to do so. This can help build a work ethic in a young child, and help them understand that hard work can yield financial rewards.
  • Understand the Concept of Saving. Unless and until an individual decides to give up an opportunity to buy something now in order to save money for later, the concept of saving is never fully appreciated. When you give your child an allowance and teach them how to save money for something they want but can’t afford right away, they may be less likely to abuse credit cards when they’re adults.
  • Cons:

  • A Sense of Entitlement. Some parents decide not to give their children allowances out of a concern that it might engender a sense of entitlement. Some believe that when a teenager goes through the effort of getting their first part-time job, they’ll gain a more accurate picture the world they’ll face in adulthood. Always having a dependable income source in the form of an allowance doesn’t teach the same lesson.
  • Control. Some parents prefer to have more control over what their children are buying, and would rather approve each purchase and pay for it themselves rather than give that power to their children. For example, given the ease with which junk food can be purchased at most schools, some parents would rather not give their children a steady source of funds to make those purchases.
  • Too Much Focus on Money. If you put too many conditions on receiving an allowance (e.g., completing chores, maintaining good grades, no misbehavior, etc.) there is a risk that the child will start thinking in terms of “getting paid.” If a child is only motivated by getting their allowance, rather than out of obligation to the family, then they may not develop an appreciation for the value and importance of things that don’t have a financial reward.
  • Regardless of what you decide to do, make sure to be clear when you communicate with your children, and follow through on any rules or guidelines you set up in connection with their allowances.

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