Money can quickly become confusing to a child when we use unfamiliar words such as income and expenses. Still, if your child receives an allowance, he or she is already intimately aware of income, though it might not be known by that name. Help your child understand the concept of income through this activity.


Talk with your child about your own income and how you earn it. Let your child know that an allowance is a form of income. Just as different factors affect your income, they also affect your child's income. These factors include:

  • Age - The age of your child often determines allowance amount. Explain to your child that this is similar to how long a person stays at a company, along the way gaining experience and expertise that is then valued at a higher amount.
  • Purpose of Allowance - Just as we get paid for the job we do, your child gets paid for the chores he or she performs.
  • Expenses - Explain to your child which expenses he or she is expected to use allowance money or "income" for, such as movies, games, and candy.
  • Payday - Designate one day of the week as payday and keep this day consistent. Also discuss different forms of payment and have your child choose a preferred form.
  • Save, Share, Spend - Discuss with your child how to distribute allowance among Save, Share and Spend piggy banks.