To Pay or Not to Pay? The Question of Allowance.

Many parents wrestle with the question on whether or not to pay their kids an allowance. While many parents see it as a way to reward kids for doing jobs around the house, others argue that children should contribute to chores and other responsibilities because they’re members of the household.

So what is the answer to this question? At UCCU, we’ve created our BeMoneySmart program to instill the children of our community with good money habits throughout their childhood.

While people hold differing opinions about how and when to pay an allowance, we’ve collected opinions we think may be helpful when paying your kids and teaching them the value of money.

The first question that always comes up when on the topic of allowance is, “How much should I pay my kids?” While many people say that it should be a dollar for how old they are or for each year in school, others argue to look at the economic climate of the neighborhood and base your kids weekly allowance on what others are  receiving. In an article by  financial writer David McCurrach entitled, “Battle Cry for Kids’ Money Management,” he states that if you are not paying your kids an allowance, you are letting them be salespeople and a manipulators. He adds that you should calculate what you are “paying” your kid now and that amount should be their allowance. Financial website states that you should give your kids, especially teens, enough to have the save, spend, and share. The goal behind allowance is not to simply give money to your children, but to provide them with a learning experience at a young age where they can fail and succeed. This is step to prevent them from making the similar mistakes with more serious consequences when they become adults.

Another question that often comes up regarding allowance is the time-worn inquiry “Should kids be paid for helping out around the house?” McCurroch’s article mentioned above discusses this questions as well. His article states that children should learn responsibility by doing chores because they’re part of the family. Continuing along these lines, he makes that point that parents won’t want their children asking “How much will you pay me?” every time they are asked to complete a task around the house, or, in extreme cases, having children refuse to participate in chores because they don’t want or need their allowance that week. Some parents navigate these tricky waters by compromising; they assign different household chores with different value and pay their children according to which jobs they do. This way, kids learn that work = money, but not every chore requires monetary compensation.

As part of the BeMoneySmart program, UCCU helps kids manage and track their spending with online tools. This  may raise another allowance question: “Should we pay an allowance in cash or with an electronic transfer?” We suggest that you begin by paying your kids in cash and teach them how to physically save, spend, and give money. Once they have mastered this concept, begin by transitioning them into managing their funds electronically. This will give them real-world experience by mimicking direct deposit. Teaching them to use UCCU’s online tools to manage their funds is also excellent training for adulthood.

Other ways to learn budgeting and keeping track of money include recording transactions in a register. The BeMoneySmart debit register is a perfect teaching tool for kids to learn to track spending. Once kids understand the concept of how money works, parents can bring them in to obtain a debit  card as part of the BeMoneySmart program. Parents and children then can work together using Personal Branch to track expenses, make transfers, and continue to be financially responsible. Whether or not you decide that awarding allowance will work for your family, UCCU is here to help you and your family make smart financial decisions.


McCurrach, David. “‘Give ‘Em an Allowance!’ The Battle Cry for Kids’ Money Management.” Kids’ Money. McCurroch & Company. 28 Jan. 2012. Web. 10 Oct. 2012

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