How Much To Give Kids For Allowance – 5 Important Lessons

How Much To Give Kids For Allowance

Determining the right allowance to give to your child can be a challenging decision for any parent. It involves balancing financial lessons with the desire to provide for your child’s needs and wants. The amount you choose can have a significant impact on your child’s understanding of money and financial responsibility.

This article delves into various aspects of setting an allowance, from understanding its value to implementing a strategy that works for your family. We’ll cover the average allowances, the concept of financial independence, and how to communicate the purpose of an allowance to your child.

Key Takeaways

  • The concept of allowance should be tied to financial independence, teaching children the value of money and budgeting skills.
  • Assess the spending power of the allowance, considering what your child will need to cover with it, such as lunch money or other expenses.
  • National averages and peer benchmarks can provide guidance, but allowance amounts should be personalized based on your child’s needs and responsibilities.
  • Allowance can teach money management and should be adjusted based on the child’s age, maturity, and financial responsibilities.
  • Communicate the purpose of the allowance to your child to ensure they understand it’s not just ‘free money,’ but a tool for learning financial responsibility.

how much to give kids for allowance

How Much To Give Kids For Allowance

Allowance is more than just pocket money; it’s a practical tool for teaching kids financial literacy. By giving children an allowance, parents can foster early exposure to money management, encouraging smart work and ownership of mistakes. It’s a hands-on budgeting experience that allows children to make choices about how to allocate limited resources, thus laying the groundwork for long-term wealth and financial independence.

The Intersection of Allowance and Financial Literacy

Allowance isn’t just about the amount; it’s about the learning opportunities it presents. Steps to financial independence include tracking spending, saving a portion of income, and reducing expenses. An allowance can help children practice these steps in a controlled environment, preparing them for the financial responsibilities of adulthood.

Financial independence is personalized, and proactive steps are necessary to achieve it. For children, setting goals and making sacrifices with their allowance can mirror the journey adults take toward retirement and wealth growth. It’s important to tailor the allowance to fit the child’s age and understanding, allowing them to reach stability and learn the importance of investing.

Spending Power of an Allowance

Understanding the spending power of an allowance is crucial for setting the right amount. It’s not just about the figure you hand over; it’s about what that money can actually do for your child. To assess this, consider the following steps:

  • Determine the expenses your child is expected to cover with their allowance. This could include personal items, entertainment, or savings goals.
  • Compare the allowance amount with the cost of items your child typically purchases or wishes to save for. This will give you an idea of how far the allowance will stretch.

Remember, the aim is to empower your child to make informed financial decisions, not to simply transfer your spending to them.

If you’re contemplating a larger allowance, it’s essential to ensure it aligns with your budget and your child’s financial responsibilities. Avoid the temptation to bail them out if they exhaust their funds prematurely; this is a valuable lesson in budgeting and prioritizing expenses.

Comparing Allowance Amounts: National Averages and Peer Benchmarks

When setting an allowance for your child, it’s helpful to understand how your proposed amount stacks up against national averages and what their peers might be receiving. Big publications and blogs may not always reflect the most current figures, but a comparison of actual spending in January 2023 can provide a more accurate picture. For instance, a study highlighted by CBS 8 suggests that on average, parents give their children $870 a month to help make ends meet.

It’s crucial to consider the individual needs and circumstances of your family when determining allowance amounts.

Here’s a quick look at the average weekly allowance by age, according to a 2017 study:

AgeAverage Allowance (Per Week)

While these figures serve as a guideline, it’s important to tailor the allowance to your child’s specific needs and your financial capabilities. The appropriate amount of financial support can vary widely based on individual circumstances, family dynamics, and cultural factors.

Determining Your Child’s Money Responsibilities

Determining Your Child's Money Responsibilities

Identifying Expenses Covered by Allowance

When determining the allowance for your child, it’s essential to identify which expenses will be covered by this money. This step is crucial for teaching them how to budget their paycheck effectively and manage their financial responsibilities. A clear understanding of what the allowance needs to cover will help your child prioritize spending and make informed decisions.

  • Personal expenses (e.g., snacks, entertainment)
  • School-related costs (e.g., lunch money, supplies)
  • Transportation (e.g., bus fare, gas money if driving)

By organizing expenses and investigating costs, you can set a realistic allowance that empowers your child to manage their money with confidence.

Remember, the allowance is a tool for financial education. It’s not just about the amount, but also about helping your child understand the value of money and the importance of establishing an emergency fund. Encourage them to track expenses and be adaptable in their budgeting. This approach will foster financial stability and prevent impulsive spending.

Teaching Money Management Through Allowance

Allowance serves as a practical tool for teaching children the value of money and the basics of financial management. By receiving a regular sum, children can learn to budget, save, and make informed spending decisions. It’s important to structure the allowance in a way that encourages these skills.

  • Budgeting: Allocate funds for different purposes, such as savings, spending, and giving.
  • Saving: Encourage setting aside a portion of the allowance for future goals.
  • Spending: Teach children to make wise purchases and avoid impulse buying.

The overall goal is to use the money your child earns as a way of teaching them how to create a spending plan and live by it.

However, simply handing out an allowance is not a guarantee of financial literacy. Studies suggest that without proper guidance, children who receive an allowance may not be more financially savvy than those who do not. It is the responsibility of parents to ensure that allowance is part of a broader financial education, which includes discussions about money and its value, as well as practical experiences in managing it.

Adjusting Allowance Based on Financial Responsibilities

As children grow, their financial responsibilities often increase. It’s essential to adjust their allowance accordingly to foster independence and teach them about budgeting. Flexibility in financial goals is key to ensuring they learn to manage their finances effectively. Start by tracking the expenses you plan to transfer to your child to determine a suitable allowance amount.

The goal is for them to make important choices about their spending. Avoid bailing them out if they spend all their money early in the month, or on regrettable purchases.

Consider the following steps to adjust allowance based on responsibilities:

  1. Assess the current expenses you cover for your child.
  2. Determine which expenses they should now be responsible for.
  3. Calculate an appropriate allowance amount that covers these new expenses.
  4. Communicate the changes and the reasons behind them to your child.
  5. Regularly review and update the allowance as your child’s needs and responsibilities evolve.

Remember, the allowance amount should be based on multiple factors, such as age, maturity level, interests, responsibilities, and the family’s financial situation. The method you choose to deliver the allowance can also impact its effectiveness in teaching financial responsibility.

Setting the Right Allowance Amount

Setting the Right Allowance Amount

Factors Influencing Allowance Decisions

Determining the right allowance amount for your child involves a careful consideration of various factors. Each family’s financial situation is unique, and what works for one may not be suitable for another. It’s essential to assess your own circumstances rather than solely relying on external advice or comparisons.

  • Family Financial Background: The financial stability and income levels of a family play a crucial role in deciding the allowance amount. It’s important to ensure that the allowance is sustainable for the family budget.

  • Child’s Spending Needs and Goals: Understanding what your child typically purchases and their savings goals can help tailor the allowance to their actual spending power.

  • Local Cost of Living: The cost of items that your child may want or need can vary greatly depending on where you live. Adjusting the allowance to reflect the local economy is important.

When considering allowance, remember that it’s not just about the amount, but also about teaching financial responsibility and independence.

  • Peer Benchmarks: While it’s not advisable to base your decision solely on what others are doing, having a sense of what peers receive can provide a useful reference point.

  • Child’s Age and Maturity: As children grow, their financial needs and understanding evolve. An allowance can be scaled to match their development and increasing responsibilities.

Balancing Generosity with Financial Lessons

When setting the right allowance amount, parents must find a delicate balance between being generous and teaching valuable financial lessons. Allowances are more than just money; they are a tool for teaching children about financial independence and the value of money. It’s crucial to ensure that the allowance is not seen as an entitlement but as a means to learn about saving, budgeting, and the consequences of financial decisions.

  • Identify expenses: Determine which expenses the allowance should cover.
  • Set clear expectations: Communicate the purpose and limits of the allowance.
  • Encourage savings: Motivate your child to save a portion of their allowance.
  • Discuss money mistakes: Use allowance as an opportunity to learn from financial missteps.

By providing an allowance, you are equipping your child with the tools to manage money responsibly, fostering skills that will serve them well into adulthood. Remember, the goal is to prepare them for financial independence, not just to give money.

As children grow, their financial responsibilities will naturally increase. Adjusting the allowance accordingly can teach them to handle more significant amounts of money and to understand the importance of work and earning. This approach helps inculcate a sense of financial responsibility and the concept of delayed gratification, which are essential for long-term financial well-being.

The ‘Break-Through Allowance’ Concept for Older Children

As children mature, their financial needs and understanding evolve, necessitating a shift in how parents approach allowance. The ‘break-through allowance’ is a concept that caters to older children, typically those in middle school, where the allowance amount is increased to reflect their growing responsibilities. This larger monthly allowance is not just about providing more money; it’s about teaching them to manage significant expenses, such as their share of a cell phone bill or the cost of social activities.

To implement this concept effectively, parents should consider the following steps:

  • Assess the new expenses: Determine which costs the allowance should cover, aligning with the child’s needs and your family values.
  • Set clear expectations: Communicate with your child about the purpose of the increased allowance and the responsibilities that come with it.
  • Review and adjust: Regularly review the allowance amount and the associated responsibilities, making adjustments as your child’s needs change.

The goal of a ‘break-through allowance’ is not just to provide funds but to foster independence and financial acumen in your child.

By carefully considering these steps, parents can ensure that the allowance serves as a valuable learning tool, preparing their child for the financial realities of adulthood.

The Debate on Allowance and Chores

The Debate on Allowance and Chores

To Tie or Not to Tie Allowance to Chores

The decision to tie a child’s allowance to chores is a nuanced one, with valid arguments on both sides. Parents must consider what they aim to teach through the allowance. Some argue that linking allowance to chores instills a sense of responsibility and work ethic. Others believe that chores should be a part of family contributions, not a transaction.

  • Pros: Tying allowance to chores can mimic real-world work scenarios, teaching children that money is earned.
  • Cons: It may lead to children only doing tasks for payment, neglecting non-rewarded but necessary activities.

An allowance should be more than a simple transaction; it’s a tool for teaching financial literacy and responsibility.

For those who choose to link chores and allowance, it’s crucial to maintain oversight to ensure chores are done well, not just quickly for payment. For others, a no-strings-attached allowance might be preferable, focusing on money management skills without tying it to household contributions.

Pros and Cons of Chore-Based Allowances

Chore-based allowances can be a contentious topic among parents. On one hand, they can teach children the value of hard work and the direct correlation between effort and reward. On the other hand, they may inadvertently teach children to expect financial compensation for all household contributions, potentially undermining the concept of shared family responsibilities.

  • Pros:
    • Instills a work ethic
    • Provides clear incentives
    • Encourages task completion
  • Cons:
    • Can create entitlement
    • May lead to negotiation over every task
    • Could overshadow the importance of non-paid contributions

It’s crucial to strike a balance between using allowances as a teaching tool and ensuring that children understand the importance of contributing to the household without always expecting payment.

When considering chore-based allowances, it’s essential to assess both the child’s age and the complexity of the tasks. For younger kids, a range of $0.50 to $2 per chore might be appropriate, while older children could earn $3 to $5, always keeping in mind your own financial situation and the need to embrace imperfection.

Alternative Ways to Teach Money Lessons Without an Allowance

While an allowance can be a practical tool for teaching financial literacy, it’s not the only method. Parents can impart money lessons through direct instruction, experiences, and positive role modeling. For instance, involving children in budgeting activities or discussing financial decisions can provide real-world context. Here are some alternative methods:

  • Engaging in conversations about money, sharing personal values and practices
  • Providing opportunities for children to earn money through commissions for extra chores
  • Utilizing educational resources such as books, games, and apps designed to teach financial concepts
  • Encouraging children to manage a budget for specific events or purchases

It’s essential to remember that the goal is to foster a healthy relationship with money, allowing children to make decisions and learn from their experiences.

Ultimately, the choice to use an allowance as a teaching tool should align with your family’s values and financial situation. If an allowance isn’t feasible or aligns with your approach, there are plenty of other ways to teach these vital life skills.

Implementing an Allowance Strategy

Implementing an Allowance Strategy

When to Start Giving an Allowance

The question of when to start giving an allowance is pivotal in developing a child’s financial acumen. Experts suggest that children as young as 4 or 5 are capable of grasping basic money concepts, making it an ideal time to introduce an allowance. This early start lays the groundwork for good money habits and a sense of financial responsibility.

The allowance should be consistent and clear in its purpose, allowing children to exercise control over their spending with parental guidance.

As children grow older, the allowance can evolve to include more significant amounts and responsibilities, such as contributing to their own expenses. This progression is often referred to as a ‘break-through allowance‘ in adolescence. Below is a suggested framework for allowance amounts based on age:

Age RangeSuggested Monthly Allowance
4-5$5 – $10
6-8$10 – $15
9-11$15 – $20
12+$20 – $30

Remember, these figures are merely guidelines and should be adjusted according to your family’s financial situation and the lessons you wish to impart. Starting an allowance is not just about the money; it’s about instilling values and preparing your child for a financially secure future.

How to Adjust Allowance Over Time

As children grow, their financial needs and understanding evolve, necessitating adjustments to their allowance. Start by tracking the spending you plan to transfer to your child to determine an appropriate allowance increase. This proactive approach ensures that the allowance remains relevant and educational.

  • Begin with a modest amount and increase incrementally as your child takes on more financial responsibilities.
  • Regularly review and adjust the allowance in response to your child’s growing competence in money management.
  • Avoid sudden large increases; instead, tie allowance raises to specific milestones or achievements.

It’s crucial to maintain a balance between providing enough for your child’s needs and wants while still encouraging financial prudence and independence.

Remember, the goal is not to stretch your budget but to shift certain expenses to your child, like buying gas for their car. Encourage them to make wise choices and learn from their spending decisions without expecting a bailout for early or regretful expenditures.

Communicating the Purpose of Allowance to Your Child

It’s essential to clearly communicate the purpose of an allowance to your child. This conversation sets the stage for their financial education and helps them understand the value of money. An allowance isn’t just about providing spending money; it’s a teaching tool that can foster responsibility and independence.

  • Discuss the value of money and how to manage it.
  • Explain the difference between needs and wants.
  • Encourage them to make thoughtful spending decisions.
  • Outline the expectations for saving and charitable giving.

Remember, the goal is not to control your child’s spending but to guide them towards making informed financial choices.

By setting clear expectations and providing guidance, you can help your child develop a healthy relationship with money. Avoid using allowance as a punitive measure; instead, focus on the positive aspects of financial literacy. If you’re consistent and supportive, your child will learn to appreciate the power and responsibility that comes with managing their own funds.


Determining the right allowance for your child is a personal decision that should be tailored to your family’s values, financial situation, and the lessons you want to impart about money management.

While it’s helpful to consider the average allowance rates and what other parents are doing, it’s crucial to assess your child’s spending needs, responsibilities, and the purchasing power the allowance will provide.

Whether you’re starting with a modest amount for a young child or a more substantial sum for a teenager with greater expenses, the key is to ensure that the allowance aligns with your parenting goals and financial capacity. Remember, there’s no one-size-fits-all answer, and it’s perfectly acceptable to adjust the allowance as your child grows and their needs change.

Frequently Asked Questions

How do I determine the right amount of allowance to give my child?

To determine the right allowance amount, consider factors such as your child’s age, the financial responsibilities they’ll have, the lessons you want to teach, and your family’s budget. Assess the spending power the allowance provides and adjust accordingly to ensure they have enough to cover their expenses.

What are some national averages for children’s allowances?

A study polling 10,000 parents found the average allowance to be $8.74/week for kids aged 4-14. The allowance typically increases with the child’s age, with specific benchmarks available from studies like the 2017 research.

Should I tie my child’s allowance to chores?

The decision to tie allowance to chores is a personal one and varies by family. Some parents use it as an opportunity to teach work ethic and financial responsibility, while others prefer to separate chores as a family duty and use allowance purely as a money management tool.

At what age should I start giving my child an allowance?

You can start giving your child an allowance as young as 4 or 5 years old, or when they begin school. The amount can be adjusted over time as they grow older and their financial responsibilities increase.

How can I teach my child money management through allowance?

A ‘break-through allowance’ is a larger, typically monthly allowance given to older children, such as those in middle school, that comes with increased financial responsibilities like contributing to their cell phone bill or buying clothes. It’s meant to prepare them for more significant financial independence.

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