child counting managing money

5 Reasons to Give Kids an Allowance

At the foundation of a person’s financial intelligence should be this undeniable truth: It is not the amount of money you have, but what you do with it that matters. This is true for a child managing a $5-dollar-a-week allowance or a corporate executive with a $5,000-dollar-a-week salary.

child counting managing money


For the better part of my life, I didn’t know this truth. On the contrary, I believed that more money was the answer. I was convinced that if we just made more money, won the lottery, or received some unexpected inheritance, all of our money problems would vanish. But the more we made the worse our problems became. Because I didn’t know how to manage what we had, more would have never been enough. We didn’t save, we didn’t give, we didn’t plan, and we had no idea where all the money went.

Unless your children learn simple, wise money management techniques, more money will never be enough.

The simplest way to get started building financial intelligence into your kids’ minds and hearts is by putting them on an allowance and then requiring them to suffer or enjoy the consequences of their financial decisions.

5 Good Reasons to Give Kids an Allowance


1. Teach kids about real life

Nothing beats an allowance for a hands-on course in values. Having their own money teaches them about responsibility, consequences, saving, and charity.

2. Help distinguish needs from wants

Do they really need that new video game or those peace sign earrings? Having their own money forces kids to think about what to spend it on. It doesn’t take long for them to realize that when it’s gone—it’s gone!

3. Put an end to the nickel-and-diming

Because the child’s allowance represents a regular expense, you create a set budget item called “Kids’ Allowances.” That brings calm to previous chaos by stopping that constant drip, drip, drip of money flowing from your pocket to random stuff for them.

4. Build trustworthiness in a child

By giving kids money to manage, you demonstrate that you trust them. And they soon learn that to keep the money coming, they need to become trustworthy.

5. Promote self-confidence

Managing money has a magical effect on a child’s self-esteem. Teaching kids how to give some of their allowances to charity, save some for a long-term goal, and spend some now gives them the tools of self-reliance.

Start young

There are no set rules for when to start an allowance program. However, I suggest waiting until kids are old enough to understand the concept that money buys things, of taking care of those things and making choices, which is usually around age SIX.

How much?

Though many families use age to determine the amount (by age, $10 for a 10-year-old is one example), think about how much money your child needs. Turning money over to them that you would be spending on them anyway is a good way to start thinking about this.

How often?

Whether it’s weekly or monthly, kids do better when you stick to a schedule.

Younger kids tend to manage their money more effectively when they get it weekly, since out of sight often means out of mind.

For older kids, consider a monthly schedule so they can learn the basic principles of budgeting.

Work for pay?

Think about your goals when it comes to the allowance-for-chores quandary. If your main goal is to teach your kids to manage money, give them a basic allowance with financial “chores” attached, such as paying for their own collectibles. If you also want to teach kids the value of working for pay, pay them for extra chores on a job-by-job basis.

Back off

The purpose of an allowance is to teach kids to become self-governing with money. Encourage kids to save a given percentage, set aside a percentage for charity (they’ll learn the value of giving back), then give them the freedom to decide how to spend the rest.

Physical bank

Want to get your children’s allowance program off to a great start? Make sure they have some kind of physical bank, box, or jars that will help them to divide and manage their money. Consider the Moonjar Classic Moneybox. This clever savings bank is actually three banks in one to teach children to save, spend and share their allowance.


A close up of a box


Over the years Moonjar has received multiple awards for innovation and it’s no wonder. Moonjar is well made and easy to use because kids even as young as age 4 years can understand and learn from the process. It makes for a timeless gift that will inspire and teach children to save, spend and share wisely for a lifetime.

My life

On my way to getting a financial life, our kids got one too. Our boys were ages 6 and 7 when I hit rock bottom and experienced a turning point that would go on to change my life forever.

My husband and I came up with what we called the Hunt Kid Financial Plan that we instituted in our family, even while we were deeply in debt. I was so determined that our boys would not turn out like me. And so, we all learned together, although the kids were totally unaware of what was going on in our lives. They took to the plan like ducks to water!

Had our plan not been successful, I would have never written a book about our journey and our kid plan in detail. But it was successful and I’m proud to tell the world that our sons, now adults, are two uniquely awesome, financially confident men. No credit-card debt ever, no student debt ever. Both sons bought their first cars at age 16 with their own money—all cash they’d saved. Both sons went on to become homeowners in pricey Orange County, Calif., by age 25.

We debt-proofed our kids and it all started with an allowance program.


A vase of flowers on a table


I would be honored for you to read my book, Raising Financially Confident Kids. It tells our story, details our plan, and is as relevant and practical today as this plan was years ago when we first came up with it.

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First published: 11-28-16; Updated 8-26-21



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6 replies
  1. Judy G says:

    Teaching finance to children is a lifelong process. Not only does it encompass saving and budgeting, but it also includes teaching the value of purchases as the children age. Using sales, discounts, and coupons are equal parts of saving money. So is determining worth by asking yourself questions – “How badly do I want/need this? Will I use it enough to justify the cost? How does it impact my future need for money? Can I find a better deal by researching online? Is it a good value for the money?” These questions apply to all purchases, large and small. My dad constantly reinforced his mantra: “Protect your name and your credit. Both will travel farther than you ever will. A little money saved gives you more power than having none.”

  2. Joyce Spencer says:

    This is exactly how I was raised back in the 50’s. My first allowance at about 6 was a quarter. I kept 3 jars in my drawer for my 3 different “accounts” – tithe, savings and spending. I was so proud when my mother would come to me for a small loan till she could get to the bank! In Junior High I started getting an annual clothing allowance. We had unpaid chores around the house, because we all shared the resources and the responsibilities. I also cleaned my grandmother’s studio apartment weekly for extra cash. I am so grateful for the lessons taught to me by my parents about financial responsibility.

  3. EB says:

    Oh, Mary, how wonderfully right you are! I got an allowance as a child, and had great input from my parents about money management growing up. So my kids got a small one as well. But it wasn’t until one day in Target during a clothes shopping trip that we turned a corner. My oldest was in 7th grade, and up until then, we had seen eye-to-eye; but on that day, she suddenly disliked every outfit I recommended. I didn’t respond very well, and in frustration, handed her the envelope containing the cash I had earmarked for her clothing money. I told her, “This is what I have budgeted. You spend it as you please, but when it’s gone, there won’t be any more until next month.” Right before my eyes, she became a frugal shopper, and headed to the clearance rack! Because it was now her money, she wanted it to go as far as possible. Not only that, she also began to ask for help, and I became her ally. It wasn’t long before I instituted a larger monthly allowance to cover other things as well—things I was already paying for, like lunch money, gifts for her friends’ birthdays. She felt rich, and handled it beautifully. I think it taught me as much as it taught her, and each of my children, in turn, looked forward to this rite-of-passage.

  4. Pat Goff says:

    We got a $1 per age for allowance growing up. Now I give my kids $3 per age once a month. They need to learn how to spend and save money. My 16 year old daughter has 50,000 sitting in a bank account for an auto accident and has money put aside for college (from her grandparents) and still adds to her bank account once a month. She also makes money babysitting, dog walking and making jewelry. I am so proud of her.

  5. Miriam Kearney says:

    I think children are entitled to a part of the family income as is everyone else. The amount of course has to be considered in terms of age and needs. My kids got an allowance from age 7 – if I remember it was $1 a week. I wasn’t so well versed in financial matters that I thought of the save/spend ratio but it was theirs’s to do with as they pleased. The amount went up $1 each year and when they were 12 I gave them $20 but included their clothing spending in it. They always had money in their pockets.


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