Earning an allowance is a good way for kids to learn about money and develop financial habits that can benefit them in adulthood.
According to a T. Rowe Price survey, 61% of kids reported earning an allowance and having to do something to earn it; 9% received an allowance with no strings attached. The majority (18%) of kids were eight years old when they first started getting an allowance.
Four in five adults say that paying kids an allowance teaches them financial responsibility. But just how much should parents pay up? If you're a parent, taking a look at the average allowance for kids can help you decide what to offer.
The Average Allowance for Kids Varies by Age
On average, the typical 4 to 14-year-old earns $8.91 in allowance per week or $463 per year. That amount includes both allowance and cash gifts received for birthdays and holidays.
When it comes to allowance earnings, however, kids aren't getting the same thing across the board. By age, the average allowance for kids breaks down differently. Here's a quick comparison of weekly allowance ranges for kids aged 4 to 14, according to RoosterMoney:
- 4-year-olds – $4.18
- 5-year-olds – $4.79
- 6-year-olds – $5.82
- 7-year-olds – $7.42
- 8-year-olds – $8.01
- 9-year-olds – $8.71
- 10-year-olds – $9.49
- 11-year-olds – $10.43
- 12-year-olds – $11.91
- 13-year-olds – $12.62
- 14-year-olds – $13.87
Allowance rates for kids can also vary, based on what the money is being earned for. The average birthday gift, for example, is $44.75, while kids earn $0.84 on average for feeding the dog.
Deciding What to Give for Kids' Allowance
If you'd like to give your kids an allowance, it's important to first consider your reasons for doing so. For example, if you want them to learn financial responsibility, what specifically do you want them to learn? How to spend or save wisely? The value of a dollar? The importance of a solid work ethic? Getting clear on your motivations can help you decide if giving an allowance is the right choice.
Next, think about how much allowance you want them to receive and what conditions, if any, you want to set on receiving it. A widely accepted rule of thumb is to offer kids $1 to $2 per week, based on their age. So if you have a 9-year-old and an 11-year-old, you could pay them $9 and $11 respectively. But, age alone isn't necessarily a way to justify paying a child a higher allowance.
A better approach may be to tailor the allowance to what's being done to earn it. For example, instead of giving each child a fixed amount of money each week, you could create a chart that assigns a set dollar amount to specific chores. Washing the family car, for instance, could be worth $15, while taking out the trash could be worth $2.
Using a sliding scale could help motivate kids to be more proactive in taking on chores. But, this system has some potential downsides. For one thing, you could end up paying out a much higher allowance than you expected if your kids are hung up about earning money. And, having a sliding scale could mean that some chores don't get done or one child racks up more allowance than another, which could lead to sibling squabbles.
You also have to decide whether you're going to offer allowance as an incentive for receiving good grades. While offering a cash reward could encourage kids to work harder in school, they may end up getting more focused on the prize than the actual learning. And if you remove the cash incentive at some point—either in high school or college—they may lose their motivation to work as hard academically.
Help Kids Create a Plan for Their Allowance
Once you've decided how much allowance your kids will receive, guide them in using it responsibly. For example, you may want to encourage them to earmark a certain percentage for spending, a certain percentage for saving, and another for charitable giving.
Having these guidelines can help them use their allowance purposefully so they're not simply blowing it all. And opening a savings account for them at an early age can help them get into the savings habit, which can help them as they get older and begin planning for things like buying a home or saving for retirement.
If saving is part of the plan, talk with your kids about setting goals for their savings. Having a set goal to work toward, such as saving enough to buy a new video game or toy, can get kids excited about saving. Help them measure their progress. Even if they're only adding $0.50 or $1 to their savings each week, they'll still get a kick out of watching their savings balance grow.
Finally, don't be afraid to let kids make mistakes with their allowance. Turn a poor spending decision into a teachable moment so kids can learn how to avoid money mistakes in the future.