What is an allowance?

An allowance is an amount of money usually given each week to a child by his or her parents. Kids can use this money to pay for their personal expenses, for things like special snacks, toys, or activities with their friends. In some families, parents do not give their kids allowances, and children just ask their parents when money is needed. But allowances are useful because they help teach kids how to manage money—including spending, saving, and donating money to charity. Children learn how to control their expenses by staying within their weekly budgets. And children learn to save—if they want to buy something expensive, such as a new bicycle—by holding onto a portion of their allowances each week. In some families, allowances are considered payment for doing household chores, and they increase when children get older and do more work around the house.