Giving Your Child an Allowance

Giving Your Child an Allowance

Cathy and I decided when our three girls were quite young to establish an allowance for them in order to teach them about the stewardship of spending, saving and giving. We created both a weekly allowance as well as a clothing allowance for each school year. Each of our kids used their allowance differently. I remember a time where the clothing allowance for a particular start of the new school year was $200. One of our daughters went to Target and bought five brand new outfits. While another daughter spent $210 on one outfit from a really nice store. Within a week of school starting our daughter with the really nice outfit ended up selling her shoes to the other daughter for a huge discount because by then she realized she could have been quite a bit wiser at how she spent her clothing allowance. Good lesson learned.

Building wise stewardship principles into our kids’ lives begins at home. One way parents can start their kids on the road to financial responsibility is to give them a weekly allowance to manage. But what does a successful allowance system look like? The late Larry Burkett, the founder of Crown Financial Ministries, once gave some advice I’ve found helpful on this subject. I’ve adapted his thoughts here:

Establishing an allowance

Before you give your kids an allowance, set some standards first with your kids. Set expectations on what the allowance is for: what expenses the allowance is meant to cover, what the money can be spent on (and what it cannot be spent on), how much you expect them to save, and what you expect them to give toward God’s work.

A weekly income helps children learn how to handle finances and teaches other key life lessons in the areas of responsibility, values, goal setting, and planning. Parents can expect their kids to make some mistakes along the way with their money, so it’s your job to help make sure they learn the right lessons from them.

Further, be careful about setting the amount of the weekly allowance. The amount should be enough so kids look forward to receiving it and enough to provide parents with the platform to begin teaching their kids solid, financial principles. On the other hand, the allowance should not be so much to satisfy all of your child’s wants and desires.

In time, parents should wean their kids from receiving an allowance and motivate them to earn their own income. Burkett suggested that parents view their children’s allowance as an ever-decreasing portion of the family budget.

Allowance guidelines

  1. Allowance amounts should be based on multiple factors, such as age, maturity level, interests, responsibilities, and the family’s financial situation.
  2. The beginning of each school year is a good time for parents to revisit allowance amounts.
  3. Having set expectations about allowance, give your kids the freedom to make decisions and mistakes with their allowance. Keep an eye on your children’s spending and don’t give them more money when they overspend.
  4. It’s a good idea to write out an allowance “contract” that includes your expectations, the allowance amount, and what day it will be given.
  5. As your child’s needs, the cost of living, the economy, and your own budget changes, don’t hesitate to review and adjust the allowance contract as needed.
  6. Be consistent: set a specific time and day to give the allowance and stick to it.
  7. Avoid linking your child’s allowance to expected household chores as “pay.” Routine chores should be expected from your kids as members of the family. The goal of an allowance is to help your kids learn how to handle money, not to pay them for contributing to the family.
  8. Resist the urge to link allowances to behavior. Don’t use withholding an allowance as a measure of discipline. Remember the goal of giving an allowance. Linking the allowance to behavior confuses the issue.
  9. Similarly, don’t set up an allowance as a bribe for good behavior. If you want to reward your child for good behavior with a monetary gift, fine. Make it above and beyond the allowance.
  10. Remember that your kids are watching how you spend your money. You are a role model. Strive to be a good one. Live out the solid, financial principles you want your child to live by. Teach by example important lessons on giving, budgeting, self-control, and discipline.

Extra money

As your kids get older, taking on and completing projects around the house over and above their regular chores, like gardening, washing cars, or cleaning out the garage, it’s okay to pay some extra money for the extra work. If your kids really want or need something that isn’t covered by their allowance or savings, provide opportunities for them to earn the money as opposed to just giving it to them. However, be fair and pay your kids equitably, according to what you are able to afford.

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Jim Burns

Jim Burns is the president of HomeWord. He speaks to thousands of people around the world each year. He has close to 2 million resources in print in 20 languages. He primarily writes and speaks on the values of HomeWord, which are: Strong Marriages, Confident Parents, Empowered Kids, and Healthy Leaders. Some of his most popular books are: Confident Parenting, The Purity Code, Creating an Intimate Marriage, Closer, and Doing Life with Your Adult Children. Jim and his wife, Cathy, live in Southern California and have three grown daughters, Christy, Rebecca, and Heidi; three sons-in-law, Steve and Matt, and Andy; and three grandchildren, James, Charlotte and Huxley.

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