In 2017 KRC Research, a public opinion research consultancy, reported that 67% of U.S. parents give their children an allowance, and 49% give their children money for earning good grades in school.
Despite the survey results, there’s little consistency in the way allowance is issued among families nationwide.
Some families distribute allowance based on completion of chores or household tasks. Others issue a set rate so that young children can gain experience managing money. Some families use allowance to curb bad behavior at school or at home, issuing allowance for the demonstration of positive qualities and traits.
Ron Lieber, personal finance writer for The New York Times, posits that these are the three primary approaches families take:
(1) No chores necessary. Children are simply given money weekly or monthly,
(2) No allowance at all, or
(3) No free money. Allowance is linked to chores or other work.
Is there a right and a wrong way to give your children allowance?
Let’s start with the pros and cons, then move into the “when,”“how,” and “best practices” questions we consider when deciding whether or not to give allowance.