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How much allowance for kids?

Paul Banas
Author Paul Banas
Submitted 19-04-2006


An allowance for kids is an important part of growing up and plays a significant role in developing the ability to manage money. Seen this way, your management and communication about it may be different than if you think of it as just a tactic to control the inflow of toys into the house.

When to begin your kids’ allowance? Age six would be the right time to start, after kids can count and begin to understand the price of different things they want to buy.

And, how much to give? A good rule of thumb is $1 for every year of age, or so says The Allowance: It’s Not Just About Money in the New York Times. Or, as the article counters, “half of that,” noting that most people decide kids’ allowance based on a very unscientific survey or friends and family.

The New York Times article cites a Yankelovich study, breaking down kids’ allowances to $5 to $9 for six to eleven-year-olds, and $10-$19 for 12 to 17-year-olds (which conveniently fits the rule of thumb). Like so many things in the financial area you’ll have to figure out the most appropriate rate for your own area and child, and expect continuous negotiations, as your children get older.

A few other things to keep in mind:

  1. Keep the accounting for your kids’ allowance simple and clear. If you hold the money in your wallet for your child, keep written accounts that the child can monitor easily. You don’t want to be in a “he said, she said” situation due to a few bucks.
  2. Experts disagree on whether allowance for kids is an “entitlement” or a quid pro quo for doing chores. Some think it’s important that the child see the value of work to earn money, while others think kids need to understand that chores are a thing you do as part of the family, and are separate from the allowance. Like a lot of things about parenting, it’s hard to say which is right or wrong, or best for the child as a life lesson, and much will depend on your own philosophy or worldview. You might consider a blend of the two where certain chores (ex. taking out the garbage, emptying the dishwasher, and shoveling the snow) are part of the family responsibility, while other work is compensated by or outside the allowance.
  3. Given that an allowance is a key aid in teaching money management, pay out the allowance to kids at a regular time each week without fail. Keeping a tight schedule, like a paycheck, allows your child to plan and budget, which are the skills you are trying to develop.
  4. Consider putting away an extra sum for charity or long-term savings so that the child can monitor this over the long haul. Avoid making this an accounting issue by keeping the math simple (ex. $1 week = $52 year into a charity fund to allocate at the end of the year) and only reporting on it at longer intervals, say quarterly.

Amazon has several books on raising smart money kids, and the New York Times article recommends Raising Smart Money Kids by Janet Bodnar of Kiplinger’s Personal Finance (I have not read this book). Much of kids’ allowance rules and amounts will be subject to change over time as kids develop their own tastes and needs that fall far from the opinions and view of mommy and daddy. Making a six-year-old pay for their own movie with mommy and daddy is not the same thing as watching your 17-year old roll out the driveway on her way to make her own movie choices. Good luck with the evolution in your thought process, while trying to keep a modicum of consistency in your communications.

Paul Banas


Note: GreatDad is partnering with Active Allowance.com to provide free chore charts for GreatDad readers.