Getting an allowance is a pretty common childhood experience. Generally the idea is that parents want to teach kids about managing money. But whether it ‘works’ or not (and to what end) is an entirely different matter, subject to much debate.
In this week’s episode of Best of Both Worlds, Sarah and I discuss allowances of all kinds. We talk about adult “allowances” — the idea of fun money, built into the family budget, that each adult can spend as they wish. Then we talk about kid allowances — whether they make sense, how they are structured, and why people give them. Finally we talk about “making allowances” — listing various house rules and personal rules, and when we’ve chosen to create exceptions to those guidelines.
Please give the episode a listen! And as always we welcome ratings and reviews — they help new listeners find us and choose to listen for the first time.
Did you get an allowance as a kid? Do you give your kids an allowance now? Do you, personally, have an adult allowance?
I didn’t get an allowance growing up. Literally, every penny I received/earned went into a savings account for university. It sucked as a kid…but I did enjoy coming out of college with no debt.
Our daughter gets an allowance; the number matches her age with a small portion being skimmed off by us for mandatory savings ($2/month) and charitable donations ($1/month). At this point the amounts are small, but she loves having some autonomy over small purchases and I think it’s great.
We don’t have adult allowances in our house. My husband and I both tend to be what Gretchen Rubin would describe as under-buyers. So, chances are, if we really want to buy something we either really need/want it.
@Elisabeth – yep, our purchases tend not to be terribly extravagant so we don’t have adult allowances either. Maybe some day we will get there, but we shall see.
I got allowance as a kid, I can’t remember how much. There was a sticky note on the fridge with all the “transactions” which included getting allowance (maybe $2?) and then what we spent. The sticky note pile went on through college and I think finished with my parents giving me some sum as a graduation present which the then wrote as a check removing what was owed to them from the sticky note pile.
My husband and I both have a “hobbies” budget. He gets slightly more than me because I just don’t use as much. This year we decided that if we drink at bars with friends and without spouses (we are in the UK – much of life is lived in pubs) or go out to eat with friends not spouses then those costs go under our individual hobbies budgets rather than the grouped “alcohol” or “dining out” budget. It turns out, I eat out with friends a lot more thank I thought and it’s definitely equalized our budget a bit.
@Rachel – I am envisioning a really huge sticky note pile if it made it through many years!
In our house, my daughters (ages 9, 12 & 14) receive $1 per year of age per week. It is given for contributing to our household. Making their beds, emptying the dishwasher and other household tasks. Half of the money goes into a savings account and half goes into a spending account to which the older two have access with a debit card. They can use this $$ on discretionary expenses (getting a treat with a friend after school, a toy or game etc.). We tend to split any birthday money they receive in the same way. On their birthdays, they choose a charity and we make a donation which comes from the “save” account.
Now that my older daughter is a teen and is coveting specific brands of clothing, we have started giving her a monthly clothing allowance (also direct deposited into the “spend” account). So, we’re still paying for her clothes, but she has the discretion over whether to buy that one more expensive piece, or to stretch her money further buy waiting for a sale or buying a non-brand name item. I feel this is teaching her to use her judgement, and the value of saving vs. spending.
@Amy – $1/year of age is pretty common… That sounds like a smart way to deal with clothing desires while still teaching the idea of using judgement instead of just asking for everything.
We started allowance when my son turned 5 (last summer) and he gets £2 a week, with the opportunity to earn extra for a few tasks. I think it’s helped him think about money a bit – is it better to buy the used Lego set or new one, or the magazine if that’s two weeks allowance. We are a bit chaotic about our delivery of it, we just don’t use cash much anymore. I read that cash makes it more real, but we never have coins and I think we just need to switch to an app.
We don’t do mandatory savings as it’s such a small amount but put his child benefit in an account which should hopefully pay for housing in uni (with grandparent top ups). Tuition is free at the moment, but who knows….
@Cb – I think the cash thing might be changing – it used to be that people “felt” spending cash more, but now that many people automatically track everything by paying digital for everything, cash is the free money since it’s outside the recorded system. Hard to know!
I am very interested in the concept of adult allowances. I’ve also been looking into it online but I can’t figure out how people come up with an appropriate amount. Is it a certain percentage of income? Or just a random number that sounds good?
I am generally an underbuyer, but I do tend to have expensive taste when I buy something, because I want high-quality things that will last (so I don’t have to buy them repeatedly!).
@Caitlin – I don’t know that there’s any rule of thumb here on number! If it is not currently a problem — like people are saving for retirement and paying all the bills OK — maybe you guys could track what you’re both spending on these types of things for a few months and choose a number that’s in that ball park? That would just bring some order to it and feel like it’s OK to spend that money, rather than wondering each time.
My teens have a monthly allowance of £20 (about 24$) which transfers automatically into their bank accounts on my payday. They pay for trips out with friends, sweets or can save it. We pay for mobile phone, clothes and activities. This will stop when the reach their 18th birthday. My 17yo doesn’t have college on Thursday or most of Friday so works in a mobile phone shop on Saturdays and Sundays. He earns about £600 (700$) a month which seems like a huge amount but is saving most of it for starting university in September. We will be paying parental contributions while he is at uni, which work out about £500 per month – I think I prefer the £20 allowance!!
@Cathy G – yep, college tuition does put an allowance in perspective! Even more so here in the US!
We give our 5-year-old $3/week, recorded on a piece of paper (it’s not as if he carries a wallet, or has any opportunity to spend money without a parent around). The biggest upside so far is that when we are in a store and he wants me to buy some random waste-of-money toy, I have an easy answer. It has dramatically reduced fussing during errands, and lowered my stress level about whether I am satisfying the right fraction of his requests.
Since I work in asset management, any episode related to money/finances is especially interesting to me! I did not get an allowance when I was growing up. I need to ask my husband what his parents did. Our oldest just turned 5 today so we’ll need to think about whether to give him an allowance. I’m leaning towards no since I didn’t have one and it wasn’t a big deal. I would get paid if I did extra things about the house and I had a job in HS, too.
We do not have allowances as adults. We talk about big purchases, but we are both kind of underbuyers in general. I spend way more on meals out since I have a monthly book club and I order with abandon since I eat out so infrequently! I’m sure my personal spending far exceeds my husbands but he is exceptionally frugal. Neither of us has expensive hobbies either and I’m pretty low maintenance in terms of personal care/clothes/etc.
Your comment on your gallery of photos that was missing Henry reminded me of the gallery my parents had in their last home. For the longest time, they had everyone’s senior pictures hung. Then those pics were replaced with wedding photos as my siblings got married. I was the last to get married by a long shot – 8 years later than my little sister. Oof, I really disliked that gallery – it was a classic “one of these things is not like the other” situation since it was all wedding photos and what became a very dated HS picture of me! I asked them to just take my senior picture down but instead my mom had me take a photo by myself when we had family photos at some point, I think when I was in my early 30s.
I got an allowance and later on, my parents tried the paying-for-chores-thing. As a parent now, I kind of view that skeptically. Why do I get paid to do chores but my mother just has to do it? Obviously if you are a 3yo, you cannot really contribute to the household. But if you’re like 12 and get paid to do your own laundry? Who pays mom who does her own laundry?
So I mainly wanted to share a hybrid moment today… we don’t do allowance and only pay for chores that are mine or my husbands. Today I paid my 9-year old daughter to organize my closet because I had been thinking about it but mainly because it kept her busy for an hour so I could get some work done. So I basically paid her to be her own babysitter…
@Jami – that is winning!