This Is Why Your Kids Need an Allowance and Why Most Allowance Programs Don’t Work

Viktor Frankl was able to survive the unimaginable horrors of the Holocaust, enduring stays at multiple concentration camps while also losing his wife and unborn child as the Nazis committed atrocities against the Jews. In the book Man’s Search for Meaning, Frankl explains that although good fortune may have been the most important reason one survived, possessing a deeper drive to live— a why— was essential to keeping one’s humanity intact. Nelson Mandela survived 27 years in prison holding on to his core belief—his why—that a majority of people should not be subjugated due to the color of their skin. I am a long-distance runner, and my stakes are certainly lower than Frankl’s and Mandela’s. However, when mile 20 means that the finish line is still 10k away, I have to tap into my why —staying healthy in body and mind—in order not to walk off the course and order a pizza.

© Charlieaja |

Ask a parent (ANY parent) if she wants to raise a money-smart kid, and she will answer “yes” 100 percent of the time. We all want our children to have a healthy relationship with money, but most of us don’t know how to foster this connection. There’s this vague notion that a good parent sets up an allowance for his or her kids, so that’s what we do. Without a plan, though, we’re rolling the dice by giving children a random amount of weekly money and calling it an allowance. The sum is really just a handout. The real reason that most well-intentioned allowance programs fizzle out is that they lack a purposeful structure— the how —and a reason or context—the why. I wrote The Art of Allowance to give you that why, and I paired this mindset with the how . The book includes guidelines on how much money to give and when, and it explains the three core skills your kids should learn. Here’s an excerpt from the book about one of those key concepts—saving for goals :

Goals are powerful life lessons for your child. The ability to save for a goal is not only a core money-smart skill but also an essential life skill for your child to learn. From a practical standpoint, keep your goal-setting simple. A five-year-old’s attention span is short. A child’s ability to visualize exists, but it’s limited. Find a simple goal, like a scooter, that might take four to eight weeks of saving. Delaying gratification is okay, but not by so much that your child’s eyes glaze over. Speaking of that scooter goal, our thirteen-year-old still rides around on the Razor scooter she bought when she was six.

Goals should be SMART: Specific, Measurable, Achievable, Relevant and Time-based.* Help her decide on something she wants that is reasonably priced (specific and relevant). Identify how much your little saver intends to contribute each week (time-based) and how many weeks saving for the goal will take her (measurable and achievable).

I’ve filled the book with practical guidelines and tools built on my belief that an allowance for kids is essential. I’ve also included key information that provides the context for why an allowance is truly important. Here’s an excerpt:

We live in a consumer culture. When do you think kids are first exposed to media messages? Before they’re two years old—sometimes when they’re babies!** Even the most progressive parents can have a difficult time keeping media out of the watchful eyes of their children. Omnipresent screens, billboards, magazines in doctors’ offices and also ads in schools heighten the challenge.

[Want to know more about The Art of Allowance?  Click here.

Research suggests you should teach kids to be wary of consumer products and spending from a very young age—early elementary or even preschool.*** (Please note that this instruction will not miraculously cure the “I want its” of a four-year-old. That would require actual magic dust.) By talking to your kids early about responsible money smarts, you expose them to messages that counter those about the consumption of stuff.

Armed with this knowledge, you’ll develop the resiliency you need when you feel like a failure for missing an allowance payment one week or when your child seems to be following the Kardashians’ spendthrift lessons more than your own guidelines. You’ll have the why to stick with your program and raise your money-smart kid. There’s more to know, but not overwhelmingly so. I purposely made sure that the book is less than 100 pages of readable text. As a fellow parent, I know time is stretched thin, which is why I wanted to give you a short, practical and powerful book. Please download a sample chapter, and see if The Art of Allowance is for you. Good luck!


Works Cited

*Lawlor, K. Blaine and Martin J. Hornyak. “Smart Goals: How the Application of Smart Goals Can Contribute to Achievement of Student Learning Outcomes.” Developments in Business Simulation and Experiential Learning 39 (2012): 259-67.

**“Marketing to Children Overview.” Campaign for a Commercial-Free Childhood June 19, 2017.

***Drever, Anita I., Elizabeth Odders-White, Charles W. Kalish, Nicole M. Else-Quest, Emily M. Hoagland, and Emory N. Nelms. “Foundations of Financial Well- Being: Insights into the Role of Executive Function, Financial Socialization, and  Experience-Based Learning in Childhood and Youth.” The Journal of Consumer Affairs 49.1 (2015): 21-22. See also: Kulhmann, Eberhard. “On the Economic Analysis of the  Information Seeking Behavior of Consumers.” Journal of Consumer Policy 6.2 (1983): 231-37.

1 thought on “This Is Why Your Kids Need an Allowance and Why Most Allowance Programs Don’t Work

  1. John Lanza Post author

    Please take another look at the post. The purpose of an allowance is to teach kids money smarts and to learn the three core money smart skills. Without a why, you’re right that it’s an entitlement. With a why, it’s a great tool to teach your kids money smarts.

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