Allowances are a great way to give kids hands-on experience with money. But should you consider it a perk or compensation? By Janet Bodnar, Editor June 6, 2007 Get a group of parents together for a discussion about kids and money, and they're almost guaranteed to come to blows over the issue of allowance -- specifically, should their children's allowance be tied to chores.The last time I wrote about this, I quoted letters from two dads who had set up successful chore-based allowance systems. That prompted a response from reader Bill Fritz, a regular correspondent and champion of the no-pay rule. "Chores are family responsibilities," writes Fritz. "Allowance is part of a child's learning experience with respect to spending and saving." Besides, says Fritz, "suppose your kid doesn't need his allowance for the next week, so he won't do any of the prescribed chores." A tricky situation -- and one that sometimes makes chore-based systems troublesome. In the other camp are parents who don't want an allowance to be a handout, and want their kids to learn the value of working for pay. Advertisement One mom has another reason for paying her daughter to do chores. "I think girls are already encouraged far too much to give selflessly for family, and they're under-encouraged to ask for reasonable compensation and seek raises," writes reader Amy Knight. "My daughter's allowance is tied to chores. When she wants a raise, she'll have to ask for it." To me, the most important thing about allowance is that children actually get one. I define an allowance as a fixed amount of money kids receive on a regular schedule, with the understanding that they will pay for certain agreed-upon expenses. Because children have to parcel out their cash and make it last, an allowance is the best hands-on tool there is for teaching them to manage money -- and far better than random handouts. Yet more than 40% of youngsters don't receive an allowance, reports a survey by Yankelovich Partners. Among those who do, by the way, the amount most frequently cited across all age groups (between ages 6 and 17) was $5 to $9 per week (selected by 19% of those surveyed), followed by $10 to $19 per week (selected by 17% of respondents). Advertisement Whether linked to chores or not, an allowance system can work if parents believe in it and are organized enough to stick with the program. But if you're wavering between the two camps, I recommend not tying the basic allowance to chores. Like Fritz, I think chores are a family responsibility. And chore-based systems can raise unanticipated problems if your kids aren't motivated by money or you lose track of the work they've done. But an allowance isn't a handout, either. It should be tied to financial chores. So, depending on their age, kids should be responsible for paying for their own collectibles, entertainment, mall excursions with friends -- or for text messages on the family cell-phone bill. To learn the value of working for pay, they can do extra jobs to earn additional cash. Paying for chores on a job-by-by basis also has the advantage of being easier for parents to monitor.