Should children be given an allowance?

Question

Rich Dad · Accepted Answer

“If you pay your kid for breathing, don’t be surprised when they invoice you for hugging.”
Let me be clear: an allowance can either build a future investor — or a future employee. The difference isn’t whether you give money. It’s why and how. If you hand over $20 every week just for existing, you’re teaching dependency. That’s a salary. Salaries create workers. But if that $20 is tied to learning money skills — saving, investing, negotiating, creating value — now you’re building a capitalist.
Here’s how I’d do it. Separate money into three buckets: Spend (50%), Invest (30%), Give (20%). If your 10-year-old gets $10 a week, $3 automatically goes into an investment account — maybe a simple S&P 500 ETF. Show them the chart. Show them how $3 per week becomes over $2,000 by age 18 at 8% annual returns. That’s how you wire their brain for compound growth instead of consumption.
But here’s the real kicker: don’t pay for chores that are basic responsibilities. Cleaning your room? That’s rent. Helping with dishes? That’s being part of a team. However, if they want to wash the car, mow the lawn, or start a lemonade stand — now we’re talking enterprise. My friend’s daughter started baking dog treats at 11. She made $200 a month in her neighborhood. That lesson was worth more than any allowance.
Critics say, “Kids should just enjoy being kids.” I say nonsense. Money is a language. If you don’t teach it at home, they’ll learn it from credit card companies at 22% interest. By age 7, kids understand basic trade-offs. By 12, they can grasp profit margins. By 15, they can run small online businesses. An allowance is simply training capital — like giving a pilot flight hours before a real plane.
The goal isn’t obedience. The goal is ownership. If your child learns early that money grows when invested and multiplies when used creatively, they’ll never fear bills — they’ll build assets. So yes, give an allowance. But structure it like a micro–MBA, not a welfare program.
Don’t raise kids who wait to be paid — raise kids who know how to make money multiply.

Poor Dad · Answer

“Money doesn’t grow on trees — and your child should know that before they’re tall enough to reach the branches.”
Yes, children should receive an allowance — but carefully and modestly. An allowance teaches budgeting, patience, and delayed gratification. Those are life skills, not capitalist slogans. If a child receives $5–$15 per week (depending on age), they learn to prioritize. If they spend it all on candy by Tuesday, they experience consequences in a safe environment. That’s far better than overspending on a credit card at 21.
However, I strongly believe allowances should be tied to responsibility. Not every chore deserves payment — children should contribute to the household simply because they are members of the family. But structured tasks beyond normal duties can earn modest compensation. For example, mowing the lawn for $10 or helping organize the garage for $5. This connects effort to reward — a foundational principle of employment and career growth.
Research from the University of Cambridge suggests money habits are formed as early as age 7. That means consistency matters more than the amount. A steady $10 weekly teaches more discipline than random gifts of $50. It’s also an opportunity to introduce savings accounts. If a child saves $10 per week for a year, that’s $520 — a powerful visual lesson in accumulation.
But be careful. Too much money too early can create entitlement. I’ve seen teenagers receiving $100 per week with no expectations attached. They grow accustomed to lifestyle spending without understanding earning power. Later, entry-level salaries feel disappointing because they lack perspective. The purpose of allowance isn’t luxury — it’s preparation.
And don’t underestimate the value of traditional saving. Encourage putting 20–30% into a savings account. Explain interest, even if it’s only 1–3%. Teach them about emergency funds. Stability matters. Not every child needs to be an entrepreneur; many will thrive in stable professions — engineering, healthcare, education — where financial discipline ensures long-term security.
An allowance, handled properly, is a rehearsal for adulthood. Keep it structured, modest, and consistent. Let children make small mistakes now so they avoid large ones later.
Teach them that money is earned, saved, and respected — not assumed.

Should children be given an allowance?

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