Parents can offer guidelines for how allowances should be managed and spent, but children must learn to make their own choices, Harris said.

Pearl suggested that parents choose a modest expense connected to the child's hobbies, such as guitar strings, and explain that the child will now pay for that item.

The child has to make the money last until the next allowance, and if he or she runs short, the parent should not bail the youngster out, Pearl said.

"They need to make mistakes while the stakes are pretty low so they can learn from them," Pearl said.