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Should We Do The Allowance Thing?

I’ll be upfront—I don’t have an answer to that question. It’s one I’ve struggled with for a while now. I have a four-year-old (and a one-year-old) and it’s been a goal of ours to make sure our kids understand money. Not just that you spend it, but how you earn it, why you should save it, and how to avoid not having enough of it. You know—all of those ins and outs that as grown-ups we may struggle with ourselves. Allowance seems to come up when you start thinking about teaching kids about money.

Other than allowance, we’ve tried to teach lessons about money in a few ways:

  • We talk about needs versus wants.
  • We discuss the cost of items and why we don’t buy everything right away (or at all).
  • We talk about earning money when we put our paychecks in the bank.
  • We’ve let our son hand over the cash to pay (on the rare occasion we have actual cash).

However, these discussions and limited interactions with money are not enough. There seems to be an ongoing conversation (okay, debate) among parents about allowance. Some believe that kids shouldn’t get allowance because it’s paying kids for what they should simply do as part of being a member of this family. I totally get it—and I agree to some extent. You live here—you do things. No one pays me to take care of this house. But more on this in a moment.

Some, like radio host and author Dave Ramsay and his daughter, say yes—give kids money—but call it a commission. Have tasks they do as part of being a member of the family and then they can earn extra for extra work. I like this. We tried it. But honestly, I got tired of paying my son $0.50 each time he emptied the garbage cans and it was a struggle to make sure all of his other responsibilities were taken care of first. And we forgot a lot. It also wasn’t enough money to really make a difference for him.

Our Four Year Old Gets a $5 Allowance

So now, we’ve thrown caution to the wind and our four-year-old gets an allowance. I read a suggestion of $1 for each year of age which seems appropriate. I also like the idea of dividing allowance (and all future earnings) between spend, save, and give so we decided to go with $5 each week to make that division a bit easier.

Here’s what we do with his $5:

  • $2 goes to spend. He can spend this on whatever he wants, though we do have veto power (for example, no toys with guns).
  • $2 goes to savings. This isn’t college savings or anything quite that long-term. We’re looking at it as savings for something that he’d need to save a bit longer for, like a bigger Lego set.
  • $1 goes to the give. We’ll save this for a while and then talk about what he’d like to donate to.


Allowing children to have access to money is necessary to help them learn about money. Though I do worry that giving my son an allowance each week doesn’t teach the lesson of working for money, he will have plenty of opportunity to learn that you work for money down the road with actual paid jobs. Also, I realized, though I’m not “paid” to do my responsibilities around the house, I treat myself to things like Starbucks, so this doesn’t seem much different than giving my child some money to acknowledge what he does around the house. We also make sure to talk with him about the fact that his allowance is part of being in this family, just like his responsibility to help and be a good family member.

We may change how we do things, but for now, giving him a weekly allowance is allowing him to learn about saving, spending (and sometimes the disappointment that comes from buying something you don’t really love), and eventually the joy of giving. I get that it may not be a perfect system, but we are committed to helping our son learn about money. Giving him money as an allowance seems to be a good way to do it. Besides, we spend more than $5 on him each week so it’s been a good reminder for us that we don’t need to buy things here and there- we can use that money for his allowance and let him start to figure out how money works (with our guidance). So in our house, we are giving allowance.

What does your family do and why?

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