Save money by increasing allowances

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Have you ever tried to implement a new program in your family, only to be met with resistance? When it comes to finances, the resistance only intensifies. Believe it or not, there are ways to get the whole family on board with budget changes and still keep the peace.  Here is just one method of lowering overall costs and making everyone happy at the same time.

Save money by increasing their allowance.

At first you might be thinking “What?! I’m trying to SAVE money here!”. In fact, their allowance might even be part of the problem. If you have realzed you are giving your children too much allowance, don’t cut it, raise it!

Note: The following should be done with both parents present if possible.

Step 1: Analyse and sort your budget

First use your budget, and find out how much you spend (on average) on your children in areas including clothing, school supplies, auto expenses, etc. Once you have those amounts, estimate how much each child consumes. On a sheet of paper write down your children’s names along the top with their indivudal expense below. Add those all up, and be sure to include their current allowance (if applicable).

Step 2: Deside what responsabilities each child will assume.

Depending on their age and ability, delegate some  of the budget items to each child. For the older children, this might include gas money, school supplies, cell phone, clothing and their current allowance. For the yonger children it might only include clothing or just  bus money. This part is up to you!

Step 3: Increase their allowance

Add up each catigory (including their current allowance) that you will delegate to each child. The number might seem quite high, but don’t worry. Take this total amount and make a resonable cut. If you normally spend $50 per month on clothing for a child, it is not unresonable to allocate them $40 extra in their monthly allowance and pass the clothing responsability to them.  It will seem like a raise to them, they will get to choose how its spent, and you end up spending less.

Don’t tell your children that you cut anything, otherwise they may cunnely revolt. 🙂

Take Billy for an example:

Billy gets $25 per week allowance!!! Oops. What was I thinking!>?!?!
I spend $100 per month on his clothing, $50 per month on school supplies, and $50 on other things. That works out to $200 a month PLUS around $100 in allowance. Change that to $50 per week allowance, and give him the responsability to buy clothing, supplies, etc. Billy will be estatic with the raise (and will probably screem with glee), and you will have saved $100 per month. Both are happy.

Tip: Cut a little more than you otherwise might in the first month. It’s always easier to raise an allowance than cut it.

Of course, Billy might blow it all. Just make sure not to bail him out after. He will quickly learn that life is expensive. This is where the self control comes in. Bailing Billy out will not teach him how to budget, and it will put you further behind.

Step 4: Announce the new allownaces in a family budget meeting

Gather the family together and explain that you feel they are ready to handle additional responsabilities. After the moaning and growning, tell them how how much each can expect in allowance now. Explain how you feel it is important that they learn how to budget their money, so instead of paying for these expenses as was previously done, each child will now look after their own responsibilities. Let them know that they won’t be bailed out if they blow all their money, and kindly teach them how to budget. This might be a good time to teach them how to “Setup a Simple Budget”.


By moving some of the financial responsibilities to your children, you can lower your monthly costs while providing
valuable learning opportunities to your children. It’s a win-win situation!

Other Options – Paying for chores

Note: This has been moved to “Hire out chores to your children for allowance” post.

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