Managing allowances for children Deciding whether to give
children an allowance is a family-by-family choice. Allowances
can be used in a positive way to teach children how to make
decisions, how to prioritize the difference between needs and
wants, and how to handle money. For some parents, giving a child
an allowance is a way to avoid disputes and can help the parents
teach their children the family's values about money. Giving a
child a regular allowance can be one of the best ways to teach
the child how to be a successful money manager. Allowances can
help children begin to understand: --How much things cost; --How
if money is spent on "x," there won't be money left to buy "y";
--How it's necessary to save money now to spend more later; and
--The difference between what is needed and what is wanted. An
allowance gives the child the opportunity to practice spending,
learn how not to spend everything they receive, practice saving
and/or investing money for short and long-term goals, and
sharing it with othe