There’s no handbook for mothering, but there are certain questions that every mother seems to ask at some juncture. Among the most frequently asked is: “What allowance should I give my kid?”
It sounds simple, but allowance is not just giving out money. It gets at teaching value, setting expectations, and creating financial habits that can last a lifetime.
(Besides, as many parents don’t even realize — though increasingly more do — any amount of thoughtful allowance is only a solution to a child’s short-term wants.) But to truly prepare for the future, a more comprehensive financial plan is required – one that considers Life Insurance Coverage for children and long-term savings tools, such as Whole Life Insurance Policies.
How Much Do Parents Really Spend on Allowance?
Allowances vary by family, but on average, children receive between $10 and $30 per week, depending on age, family type, in Canada and the U.S.
If you’re a kid and you make $20 a week, that’s more than $1,000 a year. Factor in all the unplanned extras — holiday bonuses, lunch money, clothing allowances — and the ultimate financial outlay per child can stretch out significantly.
For many families, this money actually plays an important role: teaching kids about the value of earning, the power of budgeting, and the consequences of spending. But for all the money going out week after week, few parents stop to think about what those dollars could look like if they were invested in something more permanent.
The Purpose Behind Allowance
Allowances, the way you do them, according to Letizia. Some offer money for chores. Others see it as a great way to learn. And some simply sidestep the concept.
Allowance comes in different forms for different families, but most moms and dads will admit that it teaches:
- Basic financial literacy
- Accountability for spending
- Saving for wants vs. needs
- The notion of work and wages
But allowance is inherently short-term. It addresses the now. Hardly any children convert that money into long-term assets to help them as adults. Kids’ Life Insurance Policies can help parents find the middle ground between covering everyday costs and providing the structure children need as they grow up.
What Financial Experts Recommend About Allowance
In trim, the following allowance is usually recommended: Experts usually recommend that the allowance be in trim as follows:
- Age-appropriate: The general starting point is a dollar per age in years.
- Regular: Paid at intervals to practice money management habits
- Connected to Responsibility: Teaching children to earn, not just receive
- Supported by Guidance: Topics about saving, giving, and spending
Most know, too, that it’s not quantity that counts, but rather a habit. But the same is true for insurance. Regular, small premiums into a child’s Whole Life Insurance plan can build long-term value that’s a lot more significant than an extra $5 on a Friday.
Turning Allowance into a Bigger Financial Picture
Let’s consider a simple example.
Suppose a parent gives their child $20 per week. That’s $80 a month. Now, imagine the parent sets aside just $30 of that each month into a Whole Life Insurance Plan designed for children.
What happens?
- The child still receives a meaningful allowance
- A long-term policy accumulates cash value
- Insurance coverage is locked in for life
- The plan grows steadily, even if the markets don’t
Over 10–15 years, that small redirection can create thousands in value, and offer security that no weekly payout ever could.
What Is Life Insurance Coverage for Children?
Life Insurance Coverage for children is a financial product that provides both protection and savings benefits. It insures the life of a minor but is most often used as a tool to:
- Secure future insurability
- Accumulate guaranteed cash value
- Lock in low premiums for life
- Build an asset that can be gifted to the child in adulthood
Unlike adult term policies that expire, most kids’ Life Insurance Policies are structured as Whole Life Insurance Plans, meaning they never expire and often require no further underwriting later in life.
Benefits of Kids’ Life Insurance Policies
There are several advantages to starting a policy early:
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Future Insurability
Children insured early won’t be denied coverage later due to medical conditions that may arise. This guarantees them access to future financial tools that many adults struggle to obtain.
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Low Premiums
Because children are young and healthy, premiums are lower. Once locked in, these rates typically remain unchanged for life.
-
Cash Value Accumulation
As premiums are paid, a portion goes into a cash value account that grows over time, tax-deferred and accessible later.
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Ownership Transfer
Parents can transfer the policy to the child when they reach adulthood, providing a powerful lesson in financial responsibility.
Whole Life Insurance Plans vs. RESP Contributions
Many parents already save in an RESP (Registered Education Savings Plan), and that’s great. But RESPs are restricted to education-related expenses.
Whole Life Insurance Plans, however, offer broader uses:
- Education
- First home purchase
- Medical emergencies
- Starting a business
- Supplementing retirement
The cash value built within a kid’s Life Insurance policy is not locked into one purpose. It creates financial flexibility—something children will value as adults.
Misconceptions About Life Insurance for Children
Parents often hesitate for emotional or financial reasons. Here are a few common misconceptions:
“It’s too early to think about Life Insurance.”
In fact, it’s the best time. The earlier you start, the lower the cost and the greater the long-term benefit.
“My child doesn’t need coverage—they have no income.”
While that’s true today, this isn’t just about income replacement. It’s about securing access, savings, and support for the future.
“I’d rather just give them cash.”
Cash is useful—but it’s often spent. Insurance builds discipline, structure, and value over time—things cash can’t do alone.
Balancing Allowance With Long-Term Tools
It doesn’t have to be either-or. Many parents successfully blend both:
- Continue weekly or monthly allowances
- Introduce basic saving concepts
- Reallocate small portions to long-term tools like insurance
- Involve the child in decisions around their plan as they grow older
This approach gives children a strong foundation. They learn about money now, while you prepare them for the real world later.
What Happens When the Child Grows Up?
Seal explained that most kids’ Life Insurance Policies have been designed to be easily transferable only once the child has reached 18, 21, or another age that is agreed upon and “not likely to be challenged as exploitive or inappropriate.”
At that point, they receive:
- A Whole Life Insurance Policy – but such policies are expensive.
- A cash value account, perhaps in the thousands.
- The policy favours the chance to build or is in a position to use the funds.
- A good lesson in delayed gratification and smart planning
The policy could be used as collateral for loans, to help pay for college, or to start a small business.
How to Choose the Right Whole Life Insurance Plan
Here’s what to look for when considering a plan:
- Insurer reputation and stability
- Cash value performance
- Premium flexibility and payment options
- Optional riders (e.g., critical illness, waiver of premium)
- Transferability rules for future ownership
Make sure to compare plans from multiple providers and understand what works best for your family’s current income and long-term goals.
How Much Does It Cost to Start a Kids’ Life Insurance Policy?
It’s surprisingly affordable:
- $10,000 in coverage can cost as little as $8–$15/month
- $25,000–$100,000 in coverage typically ranges between $20–$50/month
- Premiums can often be paid up in 10, 15, or 20 years—then the policy remains active for life
Compared to average weekly allowance spending, this cost is modest, and the long-term return can be far greater.
Final Thoughts: Building Financial Habits That Last
The question isn’t just how much allowance to give, but how to make the money you are giving make a difference that lasts.
Weekly cash teaches budgeting. But Life Insurance on kids — particularly with Whole Life Insurance Policies — imparts forethought, planning, and the recognition of that which is valuable.
When you think of birthdays, school years, and big milestones to come, remember this: What small change today could make a difference for years to come?
With smart allowance habits paired with intelligent financial tools, you’re raising responsible kids and empowering young adults who are clear and confident when it comes to life’s financial decisions.
Learn More: Is Term Life Insurance Worth It at Age 65?