Most family experts say yes to an allowance mainly because it teaches children to manage money. Some say no because they fear children won’t want to do chores or make other contributions for the common good unless they are paid. The bottom line for parents mulling over this issue is that you must be comfortable and in mutual agreement with the decision you make.

Here are some of the pros and cons of giving your children an allowance:

• Giving your children an allowance will help them learn about spending, saving, sharing, and to be responsible for their own money; if they lose it or spend it foolishly, they have to deal with the consequences themselves.

• Parents won’t constantly be asked to buy things for their kids; if they want something, they can save for it themselves.

• Parents fear giving children an allowance is like giving them permission to buy whatever they want, whenever they want—and they may spend it in ways the parents wish they wouldn’t.

• Kids will continue to complain that their allowance isn’t enough and want more.

We decided to give our children an allowance because it supported one of our most basic family goals: preparing our children for the real world. When you give children an allowance you provide them with real world experiences in managing their own money. We were careful not to link our children’s allowance to the completion of their regular family chores. That way, our children learned the value of cooperating and contributing to the family. Children who learn to manage money at an early age are better prepared to make financial decisions later in life.

As soon as a child begins to express a sincere interest in material wants—as in, “I want that!”—it’s time for an allowance. In other words, children are ready to learn how to handle money as soon as they stop putting it in their mouth! Depending upon the child, they are usually ready to learn about money around ages three to five. The first mistake many parents make is waiting too long to start. The majority of parents wait until their children are between nine and 12 years old to start an allowance. By that time they may miss out on the opportunity to discuss money with younger children who are more apt to listen to and take their parents’ advice. Start sooner rather than later.

Despite what your kids may be telling you, there’s no “minimum wage” requirement for allowances. We started out giving our children a dollar for each year of their age. There are other ways to determine the amount. Ask other parents. Or base the amount on what you expect your children to do with their allowance. As our children got older and took on more responsibility for their spending habits, we increased their allowance beyond the dollar for every year guideline.

Keep in mind these are only guidelines; you need to consider how many children you have and your own financial situation. Don’t cut back on groceries so your kids will get their allowance for the week! Make sure the amount is enough that your children can look forward to receiving it. But don’t give such a large amount of money that your children don’t mind wasting it. Proverbs 30:8, 9 describes a healthy balance to maintain: “Give me enough food to live on, neither too much nor too little. If I’m too full, I might get independent, saying, ‘God? Who needs him?’ If I’m poor, I might steal and dishonor the name of my God” (The Message).

Wise parents allow their children to learn from $5 mistakes now instead of $500 mistakes later on. As every parent knows, the cost of mistakes goes up as a child gets older. So let them make plenty of mistakes now and learn valuable lessons in money management for later.

Now that our children are emerging adults, we are seeing the benefits of putting money into their little hands and allowing them to make mistakes while learning priceless lessons. Our daughter does not have a single credit card and our son has only one that he pays off at the end of every month. Both have an “emergency savings” (as Dave Ramsey advises) and the one who is not a student started a Roth IRA for retirement after graduating from college. Children learn by experience. Giving your children an allowance is an excellent money management tool that will provide real world experience. And in the real world our children need to know how to manage money and be good stewards of the resources God provides. |L

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