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Allowance Types

“Children are sponges—they are going to absorb whatever is around them, so we need to be intentional about what surrounds them.”Dave Ramsey, Smart Money Smart Kids: Raising the Next Generation to Win with Money

Allowance is one of the first ways that parents try to teach their children about money. When it gets to be "that time" we assume the practice will be straightforward. Once we jump in, we find the whole exercise more complex and often frustrating.


This was my experience. Just thinking back on it gives me a stomach ache. (Our oldest is 36.) I tried a variety of strategies but wasn't great at sustaining them. On top of that, my husband and I weren't always on the same page in terms of approach, and the day-to-day fell more on my shoulders. I wanted to do well but often didn't know what that looked like.


When I later created Pizza Money® Camp, an online camp for kids ages 9-11, I wanted to understand why allowance was so challenging. (I no longer run the camp but plan to create Pizza Money materials for families and children as part of the Positive Money Club.) What I learned was that teaching kids about money is far more complex than I thought. For example, if we have partners, our approach to allowance may or may not be in sync. When combined with the different personalities and needs of our children, it's no wonder that we run into issues that make "doing" allowance easy.


This is why I came up with four Allowance Types.


Allowance types
Kids learning about money

Allowance Types

The four approaches to allowance described below reflect the different ways that parents and guardians naturally show up to teach children about money. I write more about them in my book about Positive Money.


  1. The Consultant wants children to learn about money through trial and error. The focus is on practice and learning. The role of the parent is to serve as a resource should the child reach out for guidance. 

  2. The Employer wants children to understand the connections between skills, talent, effort, and earning. The focus is on providing them with practical experiences or jobs that teach them about work. The role of the parent is to help the child build skills, create opportunities for earning, and process lessons and observations.

  3. The Planner wants children to learn the practice and value of saving and the satisfaction of delayed gratification. The focus is on how to care for money and make it grow. The role of the parent is to help the child learn how money grows, how to set goals and work toward them, and the satisfaction of achieving those goals. 

  4. The Teacher wants children to learn about all dimensions of money to develop their financial literacy. The focus is on how money works. The role of the parent is to teach the child through daily experiences and to provide additional learning opportunities as needed.


You might wonder what happens if there are clashing opinions about which approach is preferable. No worries. The four types are not mutually exclusive; they are complementary. The goal for each parent or guardian is to decide which Allowance Type resonates, choose it as a methodology, apply Positive Money principles, and stay consistent. The aim is for everyone to be clear about the objectives so activities can be planned and expectations managed. If your child learns multiple lessons about money, then all the better.

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