Allowance isn’t just pocket money—it’s a powerful teaching tool. When used intentionally, a weekly allowance can help kids learn how to manage money, make smart choices, and build lifelong budgeting habits. Whether your child is just starting to receive an allowance or already has a weekly routine, here’s how you can turn that money into a meaningful financial lesson.
1. Start with a Clear Plan
Before handing over the cash, talk with your child about what their allowance is for. Is it meant to cover treats, toys, or outings? Will they be expected to save part of it or use it for gifts?
💬 Tip: Set expectations early. For example: “You’ll get $5 each week. You’ll save $2, spend $2, and share $1.”
2. Introduce the 3-Part Budget: Save, Spend, Share
Help your child divide their allowance into three simple categories:
- Save: For bigger goals like a new toy or game
- Spend: For small, everyday purchases
- Share: For giving to others or supporting a cause
Use labeled jars or envelopes to make the system visual and hands-on.
🏦 Bonus: When their savings jar starts to grow, bring them to your local Midwest Bank location to open a Kids Savings Account!
3. Set Savings Goals
Help your child choose something they want to save for and calculate how many weeks of allowance it will take to reach that goal. This teaches patience, planning, and the value of delayed gratification.
🎯 Example: “You want a $20 LEGO set? If you save $2 a week, you’ll have enough in 10 weeks!”
4. Track Spending and Talk About Choices
Encourage your child to keep a simple spending log. After a few weeks, review it together and talk about what they bought, what they enjoyed, and what they might do differently next time.
💡 Ask Questions: “Was that toy worth it?” “Would you save for something bigger next time?”
5. Celebrate Smart Money Moves
When your child reaches a savings goal or makes a thoughtful spending decision, celebrate it! Positive reinforcement helps build confidence and encourages continued learning.
🎉 Try This: Create a “Money Milestone” chart with stickers or badges for each achievement.
Allowance as a Learning Tool
Giving your child a weekly allowance is more than just handing over money; it’s an opportunity to teach budgeting, responsibility, and independence. With a little structure and guidance, you can turn everyday spending into lifelong financial wisdom.
Want more tips? Explore our financial literacy resource hub for kids, teens, and college students—and learn how our Kids Savings Account can help your child grow their money and their confidence.