Could Giving Your Kids an Allowance Lead to Financial Ruin?

giving allowance makes kids irresponsible

Dear Mr. Dad: In today’s tough economy, I think it’s important to teach kids about the importance of saving money. The problem is that my husband and I don’t agree on how to do that. I think we should give the kids (10 and 13) an allowance, but he’s taking a harder line and says it’s important for them to earn their money. What’s your opinion?

A: Ah, allowances. Always a thorny subject. Before I jump in and start taking sides, you’re both absolutely right about one thing: People who develop good financial management habits as kids (including learning to become regular savers), are more likely to bring those habits with them into adulthood. And knowing how to manage one’s money—especially in uncertain times—is incredibly important. The big question, though, is how people get their money. Here’s where I agree with your husband. In my view, when you work hard for your money, you’re going to be careful how you spend it. When cash just shows up, it’s a lot easier to fritter away.
[Read more...]