How Much Allowance to Give Your Kids

Giving your kids an allowance is a smart idea. It's never too soon to learn about financial responsibility. An allowance can also teach other important concepts, including:

  • Delayed gratification—saving for things they really want
  • Charity and helping others
  • Budgeting

But many parents have questions about how much to give, what to do about chores, and other allowance policies. Here is what experts recommend.

Determine How Much Allowance to Give

Calculating the right allowance amount really means thinking about what you expect your children to buy with their funds. If it's simply extra spending money, then the allowance does not need to be very much, particularly for a younger child. But if you expect your child to pay for many of their own day-to-day expenses, then it should be higher.

When you're making the decision, consider:

  • What your child is now spending on the things you will expect the allowance to cover (say, school lunches, clothing, and birthday gifts for friends).
  • What your child's peers are getting, if you know.
  • A base rate of one dollar per year of age every week or every other week. The idea is to have a formula that will slowly increase as your child gets older.
  • An amount that can be split into thirds: One-third for saving, one-third for spending, and one-third for charitable contributions.

Create Sensible Allowance Policies

As with any other family rule, set expectations about allowance from the beginning, and then stick to them. Give your children their allowance each and every week, whether or not they remember to ask for it. This helps them learn how to budget.

If they run out of funds before the next payday, don't bail them out. Part of the point of an allowance is to learn how to prioritize and budget. Giving advances doesn't help kids learn how to use their money carefully.

Encourage or require your child to set aside a certain amount each week for short-term and long-term savings and for charity.

Avoid Allowance Mistakes

Keep allowances working for you and your family by steering clear of these common mistakes.

  • Tying allowance to doing chores. If the allowance is associated with specific chores, kids can stop doing the chores and say they don't want the money anymore. Keep regular chores separate from allowance (keep giving the allowance even if your child fails to do chores). Instead, allow your child to earn money beyond allowance by doing extra chores—as long as regular chores are complete. Regular chores are just part of being a contributing member of the household.
  • Withholding your child's allowance as a punishment. Take away privileges instead.
  • Doling out extra money. Don't give your child money for extras in addition to giving an allowance. This means the allowance isn't helping to teach financial responsibility.
  • Starting too late. Between five and seven years old, most kids are ready to start learning about money and understanding the concepts allowances teach.
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Article Sources

  • American Academy of Pediatrics. Allowance for Teens. HealthyChildren.org. Updated November 21, 2015.