"Can I have one?  Mom buy me that.  It's not fair!  Everyone else has one, why can't I?  How come Andy gets whatever he wants, but I don't?  You're mean!"

Sound familiar to anyone? Usually by the age of five, children are starting to develop a reasonable understanding of money and its role in obtaining what they want. How do we as parents teach the value of money to children who are growing up in a materialistic society? What should we be asking ourselves before we set up allowances?

Some questions to consider:

  1. What is the purpose of the basic allowance? Is it to teach money management? Is it to encourage some independence?
  2. Should there be opportunities to earn extra (rewards or incentives?)
  3. What is the allowance expected to cover? Just general spending money, candy, gum? Or do we want to include birthday presents, clothing etc?
  4. How much control will the child have? Do we give a nominal amount and allow the child to ‘squander’ it all on one item, knowing that there will be complaining for the rest of the week because the money is gone? Do we give a large amount and suggest simple budgeting?
  5. How much is reasonable at each age, taking into account the child’s maturity, interests and demonstrated responsibility so far?


    • When starting out, take some cues from the child. Some four-year-olds demonstrate an interest and understanding of simple money concepts. “You spent your money yesterday in that store, so we won’t be going there when we are shopping today” (may help to eliminate whining while out)
    • Keep expectations simple at first and gradually increase as the child demonstrates understanding and responsibility, e.g., a five-year-old can’t be expected to anticipate every birthday invitation. A 10-year-old will understand that waiting until Tuesday to see the movie will provide money to buy a drink as well. If the child chooses to go to the movie on Wednesday, Mom can’t be expected to pay the extra.
    • Be consistent with allowance day, i.e., every Friday evening, or Saturday morning. As adults we would not appreciate being paid when employers remembered, or had change!
    • Factor in the idea of wait time or delayed gratification with children. “Let’s go to another store and see how much it costs there.”
    • Expect children to waste some money initially. It’s part of the learning process and small mistakes at an early age may prevent big ones later.


  • Confuse allowances with consequences for behavior problems, e.g., if he hits his brother, teach him how to deal more effectively with his anger, don’t tell him he can’t have his allowance. This would tend to increase the anger to include the parent as well as brother!
  • Link allowances with regular chores or responsibilities around the home. If you tell a child you will give him $X to clean up this room. The implication is that if he doesn’t want the money, he need not clean the room. Is this OK with you? Who then cleans the room?
  • Allow them to start getting into debt or borrowing off next week’s allowance. It becomes a very difficult habit to break.
  • Use extra allowance as a way of appeasing parent guilt for not spending time with the child.

When in doubt about a situation, go back to your original intention. Ask, “What am I trying to achieve here? What is being learned by the child?”

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