Are Allowances Necessary?

Muslim parents have a higher likelihood of teaching the importance of accountability, appreciation, and wise financial decisions in their children. One strategy usually considered is having an allowance. While some parents view it as a method for applying financial management, others doubt its purpose and potential disadvantages. This article explores the concept of allowances, listing some advantages and disadvantages, provides Islamic guidance, and how to manage allowances. The aim is to assist parents make an informed decision that aligns with their parenting skills and Islamic principles.

Understanding Allowances

According to Positive Parenting Solutions, “Allowance is an offering or an established amount independent of any external factors.”

The intention of an allowance is to assist children gain valuable lessons about how to manage money well. For example, several parents provide allowances to teach their children how to spend, save, give, and make wise financial decisions rather than giving money without guidance. Therefore, parents can teach their children by helping them on how to use their money wisely.

Advantages

Teaches the value of money. They begin to comprehend that money is earned from hard work and the difficulty of earning it. For example, if they spend money frivolously, they learn the loss of money. It assists them to be grateful for money they earn and learn to spend it cautiously.

2. Teaches accountability. They learn that earning money comes from performing tasks and being consistent on a daily basis. For example, when parents assign children tasks and chores to earn an allowance, it will teach them that money comes from earning and is not given freely. Moreover, they will learn the significance of completing the task or chore done precisely in order to earn money.

3. Encourages autonomy. Children can decide about what they want to purchase and choose the approach to spend their money (all at once or overtime). For example, they will decide on an item to purchase based on their allowance money and the necessity or desire of the item at a mall. It helps them become more independent when making financial decisions.

Disadvantages

Disconnect from family duties. There is a higher chance that children perceive chores as tasks that always deserve a reward, as opposed to acts of service for their family. For instance, they might expect payment for every chore they complete, without realizing that assisting at home is part of caring for family members. As a result, it might lower their motivation to volunteer or serve others without expecting an immediate reward.
Poor money management habits. There is a higher likelihood that children may overspend or not save their money. For example, they might spend impulsively on miscellaneous items they saw on TV or wanting to imitate their friends. As a result, they might not gain positive financial habits from getting an allowance.
Entitlement. If parents didn’t establish an allowance system, some children might have an unrealistic expectation that they deserve money without effort. For example, some children can take advantage of their parents by asking for money when they don't complete their chores. Consequently, it weakens the link between work and reward.

Islamic Perspective on Providing Allowances

Muslim parents who fear Allah and spend their wealth wisely can use allowances to teach their children to make wise financial decisions and generosity.

It is narrated from Sa`d bin Abu Waqqas (May Allah Be Pleased With Him):

Prophet Muhammad (Peace and Blessings be Upon Him) said:

“It is better for you to leave your inheritors wealthy than to leave them poor begging others, and whatever you spend for Allah's sake will be considered as a charitable deed even the handful of food you put in your wife's mouth.”

(Sahih al-Bukhari)

This hadith emphasizes the role of parents to equip their children by providing money, teaching skills, habits, and values that help them become independent. When parents teach their children to budget, save, and distribute, they train them to use money wisely and use it with intent. As a result, children learn to link money with reward and comprehend that wealth is a method to support themselves and those around them.

How to Implement Allowances Effectively

Establish clear rules. Be clear about the exact amount that their child is going to receive and when they will give it. If they decide to connect their allowance to specific chores or tasks, ensure they know the actual amount. It will prevent disagreements and miscommunication.
Be consistent. Provide their allowance on the precise day on a weekly, bi-weekly, or monthly basis. They will comprehend the value of regular income and it will teach them to budget their allowance from one pay period to the subsequent one.
Divide into different categories. Aim to use different types of savings to separate the child’s allowance to each area (bank accounts, piggy banks, wallets or purses). They will notice the money and the amount they collected from their allowance.
Let them pay a portion of their purchases. Elaborate on the items that parents are buying and the other items that children are accountable for. For instance, parents can buy healthy foods and children can pay for their dessert, ensuring they understand so they can budget their allowance. It’s very important for parents and children to communicate on how they will spend their money. It will prevent misunderstandings and arguments.
Give a reasonable amount of allowance. There are several factors for parents to consider: income, children’s age, chore, task, and performance quality. However, it needs to be a fair amount. If parents give a large amount of money, the child might become entitled. In contrast, if they give a low amount of money, the child might lower their motivation from budgeting and purchasing.

Whether parents decide to provide their child an allowance, it’s significant how they teach them to use their allowance wisely and purposefully. These values begin at home. Parents can raise financially accountable children who grow into confident and conscientious adults.

Author bio: Amanda Hasan is a graduate of the University of Toronto (Bachelor of Arts) and Humber College (Law Clerk). She is the author of Joyless, an Amazon novella that tells the story of a lonely teenage girl working at an amusement park. More recently, Amanda copyedited several children's stories for Compass Books. She also worked with Muslim Network TV writing scripts, securing guest speakers, and prepping for interviews. Amanda is currently residing in the Greater Toronto Area with her family.