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How Much Is Too Much for Allowances, Tooth Fairy & Birthday Money?

Rachel Cruze

Money Management for Parents

Q: How much is too much when it comes to giving kids allowances, tooth fairy money, birthday money and those types of things?

Rachel: First of all, I wouldn’t suggest giving allowances. Give commissions instead. With allowances, you’re paying your kids for breathing. With commissions, you’re paying them for taking care of chores around the house. They don’t work, and they don’t get paid.

With money gifts, it’s all based on the family’s budget. I know I’ve seen some 16th birthday parties that are nicer than some weddings, but if the family can afford it, then that’s fine.

The important thing, though, is to keep these gifts in perspective. Ask yourself: Am I harming my child in the long run by being extravagant in some of these areas where I could easily be more conservative?

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Rachel Cruze

Growing up as Dave Ramsey's kid, Rachel Cruze learned the basic principles of money at an early age. She travels across the country teaching those same principles, in a personal and passionate message of money and hope, to teens and young adults. To find out more about Rachel, visit or follow her on Twitter at @RachelCruze.