Article Summary

  • An allowance is a regular payment to kids from their parents or guardians.
  • It offers benefits, such as financial literacy and a chance for kids to make good choices.
  • Giving an allowance is a personal choice that may only work for some families.
  • Even without allowance, kids can save and learn money skills through having their own bank account.

It’s common for parents to want to give their kids everything they need, but is it a good idea to give them everything they want? Not necessarily. Children will eventually grow up to be adults and have to prioritize needs, such as food, versus wants, such as concert tickets. An allowance for kids helps teach these fundamentals of financial management early in life, but it’s best approached with some specific goals in mind.

How much should you give? Is allowance tied to chores? We answer these questions and more to help you decide if this practice is right for your household.

What Is an Allowance?

An allowance is a certain amount of money given by parents or caregivers to their children to spend. While each family may set rules, such as not spending it all on candy, the basic idea is to give children some freedom over their finances.

An allowance may be tied to a chore system, where kids earn money based on completing household tasks. On the other hand, some families don’t require extra work to get an allowance and see it as an extension of the parents’ support for the child.

The Potential Benefits of an Allowance

Why would parents give an allowance? Wouldn’t it be easier to simply pay for things the child needs and wants? Possibly. But, if done right, an allowance can offer a few advantages.

Teaching Financial Literacy

An allowance offers one of the first experiences a child may have with money of their own. This can give families a natural opportunity to discuss financial values and goal-setting. For example, an allowance can reinforce the importance of budgeting and discourage debt, especially when kids are forced to save up before buying a relatively big-ticket item.

Parents may pay out allowance in cash or checks, or by funding a bank account that comes with a debit card. A child using these financial instruments learns how to manage money. An allowance also creates an opportunity for the child to open his or her own checking or savings account, which can prove useful as they get older.

Encouraging Work Ethic

If an allowance is tied to chores or tasks around the house, the child earns only when they work. Working to meet their financial goal is a valuable lesson for any child who wants to buy something special, like a new bike or designer shoes. It may be difficult to teach a child this lesson in any way other than putting them to work.

Some families offer bonuses for additional work or for an excellent attitude toward work. It’s common to see allowances paid with the guidance of a chore chart or other tracking system so the child learns how more work results in more pay.

Developing Independence and Decision-Making Skills

Allowances often represent a rite of passage for a child. It’s also when they start expressing how they want to spend money. Whether it’s the clothes they wear or the music they enjoy, kids begin to choose priorities by how they use their allowance money.

Because kids' allowances are finite and only purchase so much, it can help sharpen decision-making. Will they spend their allowance on a new video game or put it toward a birthday gift for Dad? Those important questions have answers that may only be discovered through experience. An allowance for kids gives them a tangible way to work through real-life money challenges and establish good financial habits.

How Much Is Enough? Deciding on the Right Amount

Just as families distribute allowances differently, the amount they give out varies as well. There’s no right or wrong allowance approach, so consider your personal situation before deciding on a payout plan. Think about the following:


One common strategy is to increase the allowance amount with age. For example, giving a 5-year-old and a 15-year-old the same payment wouldn’t make sense, as their needs and wants would be vastly different.


A child who helps with rigorous farm chores or babysits siblings might be paid more than one who keeps their room tidy and cleans up after themselves. More substantial contributions to the household may be rewarded with a larger allowance.

Personal Finance Goals

The child’s own goals could also be a factor. Kids who want to put aside money for college may be good candidates for larger allowances, provided they allocate much of it for college savings. Parents may choose to give more allowance to kids who want to pay for a larger share of expenses. Older kids may be trusted to choose and buy all their own clothes and would, therefore, need a bigger allowance.

The Family’s Means

No allowance should come at the expense of the household budget, however. If a family can’t afford to pay much for allowance, they should consider scaling it back until they can. Allowance may symbolize a growing trust in the child and more freedom, but it’s still a small percentage of the child’s total living expenses. Even a token $5 each week may be meaningful if that’s all a family can afford.

Guiding Financial Decisions

After receiving a first allowance payment, the child may have questions. One of those might be centering around improving spending and savings tactics. Parents and guardians may find this experience valuable to guide the child's approach to money. Families who discuss money together may even experience a bonding as they go through lessons together.

Distinguishing Between Wants and Needs

Kids may overvalue things they want in the moment. However, once they give a purchase careful thought, they sometimes realize it’s not as important as first imagined.

One important lesson for kids is knowing what's essential and what's "nice to have." To a child or young adult, these things may appear similar. Peer pressure adds even more confusion to the mix. If friends all want the same thing, is it now a need?

These are the questions parents can explore with their child, discussing how allowance can be used to pay for essentials. While allowances can and should be used for some wants, children may need guidance to know when it’s appropriate to do so.

Methods To Encourage Savings

Kids may get very excited about concert tickets that will soon sell out or limited-time promotions. These can be opportunities to teach kids about instant gratification and the value of waiting for important things. These are also opportunities to explore savings tools, like a PNC Bank S is for Savings® account to support savings goals and learn financial literacy while accumulating interest.

For a child who can’t earn money outside an allowance, this interest-bearing account serves two purposes — it gives them a safe place to save for the future and helps them benefit from compound interest. The added earnings may motivate them to continue saving for the things they want and need the most.

Final Thoughts

So, should kids get an allowance? While giving an allowance is a popular choice, not all families do it.

Whether it’s right for you depends on what you want your kids to learn from it and how it fits into your financial goals.

PNC has products just for tweens and teens to help with saving. S is for Savings® and Virtual Wallet Student® may be a great first step toward financial independence, with or without an allowance. Talk to a representative today to learn how to get started.