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At an age when the child is sufficiently grown up and is not earning, an allowance becomes a necessity. A child has to go to school and buy something for himself to eat or share with his friends, who have pocket money, and share with him. As such, the amount of allowance that has to be given to the child becomes important. The allowance not only depends upon the demand of the child but also on the availability of funds with parents.

Allowance to the kids can be broadly classified as being necessary for his pocket expense, or both for pocket expense and to meet with the requirement of necessities. Availability of money in the hands of child which he gets to spend over a period of time, say one month, will make him think a number of times before spending. The child will develop the habit of planning. This will be of great help in his later life, as with an increase in age the habit developed in childhood will take root.

To provide proper training tell the child to make a monthly budget of his requirement. Based on the budget, as approved by you, let him spend on his own and see the variances. Ensure to properly instruct and explain to him the variances and places where he could have saved money. If the child is in a position to supplement the funds available with him, by earning on his own, he will get to understand in a better manner the value of money, and will always try to save something, thus inculcating the saving habit. The income may be supplemented by working on a holiday in some store or doing some work for a neighbour.

Thus paying of allowance to the kid plays an important role in his future life. Ensure that the allowance is sufficient to meet his needs and he has not got too much surplus for the budgeted period. Availability of excess money may drive him to develop some habits which may not be desirable for his future life. Similarly, if availability of money in his hands is not sufficient for his needs, it may lead him to get money in an undesirable manner. Both have long term consequence. The allowance should be balanced and properly monitored.