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Kids & Money: Deciding When to Stop Paying Allowance

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allowanceOne of the ways that many parents teach their children money management skills is by paying an allowance. An allowance, whether a true allowance or payment for chores, provides your children with their own money to manage. The idea is to provide children with a way to develop good money habits from a young age.

At some point, though, it is no longer necessary for you to pay children an allowance. You have probably increased the amount of allowance you pay as your child grows. However, as your child begins to make his or her own money, you can start paying less — or even stop paying allowance altogether.

Does Your Child Still Need Money from You?

Your first determination to make is whether or not your child still needs money from you. When your child is younger, and his or her options for earning money are limited, money from you is important. However, older children begin getting jobs, and earning their own money. At that point, you can revisit your allowance policy.

An after school job can be a great way for teens to earn money. In many cases, your teen can earn more with such a job than he or she receives from you. Review your child’s income. Assess what expenses you expect him or her to pay. You can start encouraging your child to cover more of his or her expenses when he or she makes more money.

In some cases, your teen’s after school job may not provide enough money to completely cover what he or she is expected to pay. In those circumstances, you can continue providing an allowance, but explain that you will reduce the amount you pay, since your teen can supplement some of the money on his or her own.

Paying Allowance in College

My parents stopped paying me an allowance when I went to college. They stepped down what they gave me as I earned more from my job as a cashier at a craft store, and from teaching piano, and when I moved out, I was expected to be more responsible for my weekly expenses (I got a part-time job in the university cafeteria). However, in a way, my parents still gave me an allowance of sorts. While they didn’t give me a weekly amount, they did pay for my housing while I was at school. This eased matters for me, and I covered all my other expenses.

Other parents, though, still consider college as a “job,” and provide an allowance to help students cover their expenses. What you do depends on your priorities and preferences, and what you have agreed on with your student.

Bottom Line

At some point, though, you do need to stop paying an allowance. Whether you do this when you teen gets his or her first after school job, or whether you wait until after your child graduates form college, is up to you. If you want your child to become financially independent, at some point you have to stop giving them money, even if they “earn” it through chores.

(Photo: all in green)

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5 Responses to “Kids & Money: Deciding When to Stop Paying Allowance”

  1. Ideally, an allowance should just be a temporary way to teach kids about money. An even better way is to pay them for individual jobs well done – this is more like the real world. At the very least, come up with a plan for earning the allowance. Not just something vague, but something truly worthwhile. Otherwise, the lesson becomes go to mom or dad when you need money, and that’s not a great way to teach your kids about money.

  2. Shirley says:

    I personally agree with Kris. You wouldn’t tell your child to go and ask a neighbor for money for something they want to buy, but you might tell them to scour the neighborhood for lawn mowing jobs. The same should apply to money received at home. Money earned means a great deal more and this is where the financial lessons are learned.

  3. Andy says:

    I will provide the essentials for my kids and I expect them to pay for their privileges. Owning a car is not a right, so they will work to pay for their own gas and possibly insurance. Going to movies with friends? They’re going to have to work for that. I will only give an allowance for them to spend on necessities, which they earn through chores. Reducing their allowance when they start working will discourage them from working if it equals to the same amount. Controlling the use of money from allowances and working, I think, will help them understand the value of money.

    • Strebkr says:

      Andy – I kind of agree with you about reducing the allowance when they start earning money. It will discourage earning (think welfare abusers). On the other hand, at some point you have to lower the allowance. Maybe schedule it out so they know when they are 16 they get X and when they turn 17 they get a little less because they can earn hopefully more on their own.

  4. Strebkr says:

    I never got an allowance when I was a kid. Not really sure how I first learned about money honestly. Starting in middle school, I got lunch money, but I ended up packing my lunch most of the time and my parents allowed me to keep the money. That was in 6th – 8th grade. At the same time I started earning money by mowing lawns. I was making $200 a month which was HUGE money for a kid in middle school. I think my parents figured the $10 or $20 bucks a week that would have been my allowance wouldn’t have made a dent so they didnt offer, and I never asked because I thought I had all the money I would ever need.


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