Unraveling The Complex Benefit Analysis Of Giving Kids An Allowance

It might have been part of your childhood, and if you have kids of your own it might be something that you provide now. But what are the real advantages, if any, of giving children an allowance?

Some say it helps kids learn more about the value of money and the importance of saving it … but that’s not always true. Many families find that an allowance on its own doesn’t provide any benefit, although it can be part of a strategy for raising financially well-informed children.

How to do it right

Finance columnist Michelle Singletary recently shared several stories from her readers that demonstrate just how different the experience of receiving an allowance can be depending on the actions of the parents.

One success story came from someone whose father cashed his paycheck each week, came home and divided the money into envelopes for all of the bills, and then placed a small amount on the table divided up among all the kids.

“Because this happened last, we children were all glued to the entire process and grew up with a good understanding of budgeting,” the reader wrote.

When it goes wrong

Another anecdote came from someone who was promised a $5 weekly allowance as a child, but whose parents often found themselves unable to afford it, leading to a mounting unpaid balance.

“When it got high enough, they would ask me what I wanted and they would then buy it on their credit card, which they did not pay off in full,” the individual wrote.

Fortunately, that reader learned not to follow in those footsteps and was able to form healthy financial habits as an adult.

Allowances are neither good nor bad on their own, but kids will always learn the most from whatever example their parents set.

Chris Agee September 5th, 2024

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