Children get excited with money, but don't always know why they get it and how to use it. For example, many children receive an allowance, but don't understand that this is their income and that it's based on many factors.


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 and along the way gains 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. Discuss any opportunities for your child to earn additional income through extra chores or a job well done, relating this to overtime or bonuses in the workplace.
  • Expenses - Explain to your child what 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.