FAQs
An allowance is a great way to teach kids about money early in life. An allowance also helps give your child a sense of independence and responsibility as they’ll be able to practice spending and saving with their own money. An allowance can also teach teens about budgeting for some of their personal expenses, such as going out with friends or buying takeout.
Just as there’s no right way to set an allowance, there’s no set age when you should start giving your kids an allowance. Introduce an allowance when you think your child is ready. Kids are able to start to grasp the concept of money around the age of 6 and according to a University of Cambridge study, children form money habits as early as the age of seven. Signs that your child might be at the right age for an allowance include if they ask for one, if they’re interested in learning about money, or want to be independent and spend their own money.
The debate about paying an allowance for chores can be contentious. Chances are you were paid an allowance with the expectation that you help around the house. Ultimately, it’s your choice how you want to handle tying chores to an allowance. The upside to paying kids an allowance to do chores is it teaches them the value of earning money (a precursor to their adult lives). On the flipside, some caregivers believe children should contribute to household chores because they are part of the family unit and not be paid for their efforts.
An allowance is likely your child’s first experience of managing money. Learning to handle responsibility is a lifelong skill. With access to an allowance, kids can learn the difference between a want versus a need, and spend according to what they value. Kids can also practice saving a portion of their allowance, tracking their spending, or donating money to others.
