Allowances: Incidence in the US and Relationship to Financial Capability in Young Adulthood

J. Michael Collins () and Elizabeth Odders-White ()
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J. Michael Collins: University of Wisconsin-Madison
Elizabeth Odders-White: University of Wisconsin-Madison

Journal of Family and Economic Issues, 2021, vol. 42, issue 3, No 9, 533-544

Abstract: Abstract This study describes the use of allowance payments by parents to children in the United States (US) and documents the association between receiving an allowance as a child and financial capability as a young adult. Based on the Panel Study of Income Dynamics, the majority of children in the US ages 6 to 15 receive an allowance in childhood. Allowances are a commonly used strategy by parents across many demographic and socioeconomic groups, with no strong relationship between parental income or education and parents offering an allowance. Young adults who received an allowance as children reported modestly higher levels of financial responsibility, suggesting that allowances for children and teenagers may be a useful complement to other financial development strategies for young people.

Keywords: Allowance; Pocket money; Financial capability; Financial socialization; Intergenerational transfers (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (3)

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DOI: 10.1007/s10834-020-09748-y

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