Current Allowance Theories

After doing quite a lot of research and talking to many parents over the past 6 years, I’ve noticed the following allowance approaches:

The “No Allowance At All” Camp

In my experience, parents in this camp usually didn’t get an allowance when they were young. A common opinion is that if it was okay for them not to receive an allowance, then it’s okay for their child not to receive one. Several parents I have talked to who felt this way seemed almost hostile and even angry, when the subject of allowances was brought up. They want their children to have to work for their money just like they did. They view the need for an allowance through their conditioning (in other words, how they were raised to see things), so they often just do with their children as their parents did with them.

Parents who feel this way are sometimes struggling with money and personal finances themselves. They are often very emotional about the financial issues in their lives so getting them to just talk about the concept of giving their child an allowance is often more than they can handle. If this is you, it’s okay. Just stay with me here and you’ll begin to understand.

Children who don’t get an allowance sometimes develop a good work ethic, but they learn very little about money. They also tend to think that in order to have money they must always trade their time and energy for it. These children often don’t learn how to manage, save or invest their money wisely. They can also grow up with the belief that they have to work ‘hard’ to make money, instead of learning that they can work ‘smart’ to make money. In addition, these kids can develop poor buying habits because they have little experience buying things for themselves on a regular basis.

Parents in this camp are often life-long employees or self-employed, always trading their time and energy for money. While there is nothing wrong with this lifestyle, it doesn’t teach kids the importance of developing passive income streams by investing their money in assets (business, stock market and real estate). Not giving your kids a chance, from a young age, to take care of themselves financially limits the amount of experience—positive and negative—they can have with their money. This experience, to a great extent, then limits how prepared they are to successfully handle their own finances when they leave home.

The “Doing Chores Allowance” Camp

Parents who require their kids to do chores around the house in exchange for an allowance tend to think that kids should ‘earn’ their allowance by ‘doing’ something. The only trouble with this concept is that it negates the idea that kids should participate as contributing members of the family by having certain duties and responsibilities that go along with being a family member; namely, keeping their rooms clean, helping out in the kitchen and yard, doing laundry, shopping, etc. These parents often provide a little ‘extra’ allowance for additional duties like washing the car or mowing the lawn.

The main disadvantage to this type of an allowance is that your kids may think they don’t need to do their chores if they don’t need the money. Paying kids for chores certainly doesn’t teach them that making their beds is a great habit to get into every morning. If paying kids for doing chores worked, these kids would all grow up to be great housekeepers, but so far I think the jury is still out on that one! If you have ever visited kids in college and noticed the way they keep their dorm rooms, you might understand what I mean.

The “Paying for Grades” Camp

It’s important to understand the difference between intrinsic and extrinsic rewards or motivation. Paying for grades seems like paying the child for behavior that is best for the parent, not necessarily best for the child. For a child who is already motivated to get good grades, dangling a financial reward for better grades may not have much of an effect on behavior. For a child who has no interest in school or getting good grades, the money may either motivate extrinsically and eventually create some intrinsic motivation, or it may cause exactly the opposite result. It may cause the child to become resentful of money in general, which can then lead to long-lasting negative financial beliefs that may affect his financial future. For deeper insight into this topic, please read, Secrets of the Millionaire Mind by T. Harv Eker or visit:
We tend to equate a child’s success in life with how well he does in school. However, there’s no proof that this correlation is valid. There’s not really any proof that if they finish college they will succeed in life. Some of the most famous people in the world didn’t even finish high school.
• Robert Frost was dropped from school for daydreaming. He was probably composing poems during some of his daydreams.
• Frank Lloyd Wright daydreamed so intensely that his uncle had to shout at him to bring him back.
• Thomas Edison was said to be “addled” because of his excessive daydreaming in class.
• Nikola Tesla had such strong visualization abilities that he would imagine the workings of his inventions in great detail without putting anything on paper or conducting any experiments until all of the problems were worked out.

For a more complete list of other famous people who suffered all sorts of problems related to their education and who later found success, visit this web site:

Traditional schools test for genius in only a few areas, mostly Logical-Mathematical, Verbal-Linguistic and sometimes Spatial Visual. Genius, however, exists in many more areas. An inspiring book on accelerated teaching techniques, Quantum Teaching, by Bobbi DePorter, Mark Reardon and Sarah Singer-Nourie, describes the many varieties of genius.

We share these different kinds of genius with kids and parents in all of our programs because we want kids to know that they are all geniuses; they just have to find the genius in them. The main categories are:

• Spatial-Visual—thinking in images and pictures
• Linguistic—thinking in words
• Interpersonal—thinking by communicating with other people
• Musical-Rhythmic—thinking in rhythms and melodies
• Naturalist—thinking in reference to nature
• Bodily-Kinesthetic—thinking through physical sensation and movement
• Intrapersonal—thinking reflectively
• Logical-Mathematical—thinking by reasoning

For more information, or to give your child’s teacher this amazing resource, visit:
There are studies that show that the more schooling a person gets, the higher the salary they command; but remember, this correlation is only true for people who remain employees all their lives.

Nearly one-third of all high school students don’t graduate and less than 50% of those that do aren’t prepared for college. So the solution for these kids is not to pay them for grades but prepare them to use the one tool we know they’ll have to use…money!

Allowance Conclusions

After teaching Camp Millionaire and Money Camps for Kids and Teens for six years, and spending tens of thousands of dollars attending train-the-trainer, financial and personal growth seminars, I’ve come to the following three conclusions regarding kids and allowances:

Conclusion #1:

An allowance, just like most things in life, can be a good thing or a not-so-good thing. It can motivate or demotivate. It can be supportive or unsupportive. It can create self-reliance or dependence. It all depends on how you use it, how you and your child interpret it and the experience your family has around it. The end result from any type of allowance varies with each child. Just like no two children are alike, neither is the end result when using an allowance, at least the types of allowances we’ve talked about so far.

Conclusion #2:

Almost all children, regardless of age, understand the difference between spending your money and spending their money. Yours is generally much easier to spend!

Conclusion #3:

If children are empowered with the information, tools and responsibility of learning how money works, along with the encouragement to establish a few simple but powerful money habits, they generally grow up to be much more financially responsible than children who do not receive this education.

Though all three conclusions are important, conclusion #3 is what led me to develop The Ultimate Allowance system. Order or download your copy today.

Remember, you can teach them now or they’ll live with you later. It’s your choice!