Giving an allowance can teach children good money habits

After falling out of favor for some years, giving a child an allowance is once again a popular thing to do.

In a survey from T. Rowe Price, 70 percent of parents reported giving an allowance to their children ages 8-14.

Parents are divided on whether or not an allowance should be tied to completing chores:

• One side argues that tying an allowance to chores teaches children they must work for money.
• The other side warns of creating an expectation of payment for even trivial chores, like unloading the dishwasher.

A compromise solution might be to award a “base” allowance but expect children to perform certain standard chores as part of contributing to the household, not as a condition of receiving an allowance.

If you do proceed with giving your child an allowance, be sure to set up a youth savings account for your young children or teens. It's not too early to start building savings habits and funds.

Learn more | Youth savings accounts