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

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  • J. Michael Collins

    (University of Wisconsin-Madison)

  • Elizabeth Odders-White

    (University of Wisconsin-Madison)

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.

Suggested Citation

  • J. Michael Collins & Elizabeth Odders-White, 2021. "Allowances: Incidence in the US and Relationship to Financial Capability in Young Adulthood," Journal of Family and Economic Issues, Springer, vol. 42(3), pages 533-544, September.
    • Handle: RePEc:kap:jfamec:v:42:y:2021:i:3:d:10.1007_s10834-020-09748-y
    DOI: 10.1007/s10834-020-09748-y
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    Cited by:

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    2. J. Michael Collins & Madelaine L’Esperance, 2023. "What do students gain from banks in schools? A field study," Review of Economics of the Household, Springer, vol. 21(2), pages 567-590, June.
    3. Susnaningsih Muat & Nurul Shahnaz Mahdzan & Mohd Edil Abd Sukor, 2024. "What shapes the financial capabilities of young adults in the US and Asia-Pacific region? A systematic literature review," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-15, December.

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