North Dakota State University
NDSU Extension Service

Kids & Money

a newsletter for young people


Where Does Money Come From?

Have you ever thought about where money comes from? Wouldn't it be fun if money grew on trees and you could pick all you wanted? Your mother, father or guardian must work for the money they spend and also the money they give you.

Where do you get your money? Some boys and girls get money from parents or guardians, working, gifts or an allowance.

What Is an Allowance?

An allowance is a set amount of money given regularly to a child, usually by a parent or guardian. Usually the parent and child decide together on the amount of allowance. They also decide what the money can be used for. Children can count on getting the money. Children can also plan for using this money.

Learning With an Allowance

When you have money of your own, you must make choices on how to spend it. You must know that once you spend the money, there is no more. Sometimes you may make mistakes in how you handle money. Remember that this is all a part of learning to manage money.

Boys and girls who receive an allowance should plan how to use the money. This can be fun. It can help you get those things you want. Good planners use money for sharing, saving AND spending.

Having an allowance is a good way for you to learn how to keep records. Records show what you have used your money for.

Your record should help you see if you're spending money in ways that you really want to spend it. A record can also help your parents decide if your allowance is the right amount for you.

Suggested Activities

  1. Ask your parent or guardian to help set up a spending plan which includes money for sharing, saving and spending.
  2. Talk to your parent or guardian about receiving an allowance or an amount of money that you would be responsible for managing.
  3. Make a list of expenses that must be taken care of with your money, and then keep a record of how you use the money. (Look in the issue titled, "Keeping Track Of Your Money" for a example of a record of income and spending.)

Money and Your Kids

a newsletter for parents



An allowance is a child's share of family income to be used as he or she chooses on certain defined, agreed-upon expenditures. In one family the child may pay for school lunches with allowance money. In another family, the child may be expected to pay for all clothing. Giving allowances is one way to help children gain experience in handling money and making decisions about how it should be spent. The important characteristic of an allowance is that it is a regular source of income. Children can count on receiving it and can plan for using it.

How Much Allowance?

Since an allowance is a fixed amount of money for spending over a given time period, several factors figure into how much an allowance should be.

Start by sitting down with your children and estimating their expenses. Set an allowance based on these estimates and give it on a weekly basis, if possible. Help your children keep a record of expenses during the next few weeks. Then sit down together again and decide if the allowance needs adjustment. This approach will teach your children to be comfortable about discussing money.

Make it clear whether or not you will provide money for special items. Plan to review the allowance on a regular basis. Whatever amount you decide on, make sure there's room for discretionary spending. An allowance that doesn't allow your children to make any decisions on their own is self-defeating.

Most child development and money management experts agree that it is not a good idea to tie allowances to chores. In most households, some tasks need to be done and sharing these is expected of all family members. Additional chores may be offered to the child as money-making opportunities.

Also, the practice of paying an allowance for good grades or good behavior has been questioned. Children may see the allowance as a bribe or punishment. Positive behavior can be reinforced in other ways. An expression of appreciation for a job well done often means more to children than a financial bonus.

Parents Decide Methods

Only you as a parent or guardian can determine the best methods for sharing income with your children, but there is evidence that children who get spending money without asking for it are more likely to develop a sense of the real value of money. Children seem to learn healthy attitudes about money when they have regular, realistic incomes and can use the money independently. This involves allowing children to make their own choices (when possible), record purchases, share and save for realistic goals. Once choices have been made, allow children to live with the consequences of those choices. In short, let your children make mistakes, accept responsibility for poor decisions and learn from the experience.

If you decide to encourage your child to learn to manage money, it is important that you consider what money means to you and what you want your child to learn. Provide money and occasions to spend it at an early age and increase those experiences as your youngster matures. Concentrate on the purpose of the spending and saving experiences.

In summary, remember that children need experience in making choices and accepting responsibility for their decisions. Managing an allowance is one way to gain this experience.

For more information the following publication is available at your county office of the NDSU Extension Service.

HE-247, "Money in Our Children's Hands"

Brought to you by the NDSU Extension Service and funded by the Securities Protection Fund from the Securities Commissioner, State Of North Dakota.

See your county extension agent for more money management information and other family economics programs.

January, 1996.

NDSU Extension Service, North Dakota State University of Agriculture and Applied Science, and U.S. Department of Agriculture cooperating. Sharon D. Anderson, Director, Fargo, North Dakota. Distributed in furtherance of the Acts of Congress of May 8 and June 30, 1914. We offer our programs and facilities to all persons regardless of race, color, national origin, religion, sex, disability, age, Vietnam era veterans status, or sexual orientation; and are an equal opportunity employer.
This publication will be made available in alternative format to people with disabilities upon request (701) 231-7881.

North Dakota State University
NDSU Extension Service