An allowance can be a great way to teach kids how to be responsible with their money and create a plan to reach their financial goals.
According to a T. Rowe Price survey, 59% of parents give their kids an allowance that they have to earn. Most of these parents said they want to teach their kids the meaning of working for money and how to manage money.
Let’s take a look at some strategies for giving an allowance to kids, including how much children receive on average at different ages. We’ll also explain the difference between an allowance and a job, and review financial lessons kids can learn from managing their own money.
- Factor in the age of your kids and what you expect them to do with the money when determining how much allowance to give them.
- An allowance is a regular payment, typically for performing basic household duties but not all parents require kids to earn it.
- In contrast to an allowance, a job is a specific task they must complete in return for a specific amount of money.
- Once you have an allowance plan, you can review it with your child and make changes as necessary.
The Average Allowance for Kids Varies by Age
The average weekly allowance for kids is $9.80, however average allowances vary by age, according to RoosterMoney. For example, a 14-year-old earns $15.70 on average, whereas a 4-year-old receives $5.12. Here’s a breakdown of the weekly allowance ranges for kids ages 4 to 14.
- 4-year-olds – $5.12
- 5-year-olds – $5.46
- 6-year-olds – $5.99
- 7-year-olds – $8.05
- 8-year-olds – $8.19
- 9-year-olds – $9.18
- 10-year-olds – $9.85
- 11-year-olds – $11.15
- 12-year-olds – $13.11
- 13-year-olds – $14.80
- 14-year-olds – $15.70
Allowance rates also depend on what the money is being earned for. While the average birthday gift is $50.36, kids earn an average of $7.48 for mowing the lawn, $4.48 for raking leaves, and $1.94 for washing windows.
Deciding What To Give Kids For Allowance
What you give your kids for allowance should depend on several factors, including their age and what you expect them to do with the money.
“If your son or daughter is younger, you can give them their age in dollars each week. So a 5-year-old, for example, would get $5,” Mike Hunsberger, owner of Next Mission Financial Planning told The Balance in an email.
You can consider the average allowance for a child their age, then adjust it according to your personal expectations of them and your own budget.
“As they get older, you might want to raise this amount, especially if you expect them to pay for more things with the funds,” Hunsberger said. “For a teenager, this could be $25 per week or more if you want them to buy their own clothes or pay for most of their activities.”
Allowance vs. Jobs for Kids
Kids can earn money of their own from receiving an allowance and having a job, but they are different sources of income with different lessons. An allowance is an expected payment, whether for performing chores or not. A job is tied to a specific task.
“An allowance is money your child receives on a regular basis unless you remove it for poor behavior or another reason,” Rachel Fink, founder of Parenting Pod, said in an email. “A job, on the other hand, is a specific task they must complete in return for a specific amount of money or reward.”
Whether an allowance or job is right for your child depends on your unique family circumstances. Your personal preferences, the way you were raised as a parent, as well as the child’s motivation may also play a role.
A regular allowance can promote financial independence. However, if most of your child’s necessary expenses are covered, paying them for a job might make more sense. Consider an hourly rate for extra work, such as one based on their age.
“The transition from earning money with an allowance to a job can happen whenever you feel your child is ready,” Fink said. “For some children, it may be as young as age 5 or 6. For others, the ability to do more difficult chores and understand responsibility might be an indication that they’re ready for a larger role in contributing to the family income.”
Tips for Giving the Allowance
Once you decide how much allowance your kids will receive, you should define which basic household duties they’ll need to perform to receive it.
“You may want to create a visual reminder and post it in a common area of your house, like the refrigerator,” Amanda Monschein, Financial Advisor at Stratus Wealth Advisors told The Balance in an email. For example, the reminder may include a note to:
- Make the bed each morning
- Keep the floor clear of dirty clothes
- Unpack the backpack as soon as you come home from school
- Put dishes in the sink after each meal
You may want to meet with your son or daughter every month to discuss whether changes are needed. With an established communication system, kids can take ownership of their household duties without constant “nagging” from parents.
Finally, make sure you and your child are on the same page with when they will receive their money.
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 50 cents or $1 to their savings each week, they can still enjoy 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 your kids can learn how to avoid money mistakes in the future.
Frequently Asked Questions (FAQs)
Why should kids get an allowance?
There are many different opinions about whether kids should get an allowance, when, and how much. The decision is ultimately up to parents as they evaluate their family goals and what role an allowance would play in them. What's most important is that you discuss financial matters with your children and work on these decisions together with them as they grow into greater responsibilities.
When should I start giving my kids an allowance?
The survey data shows that many children start receiving an allowance by age 8, and some start even younger. There's no set age for every child. Here again, the decision comes down to family priorities and budget. The sooner you start giving an allowance, however, the sooner you can use the opportunity to teach them the value of money, savings, and budgeting.
How often should you give a kid an allowance?
It's most common to give an allowance weekly, and this makes it easier to keep track if you're tying the allowance to specific chores. This may also be more motivating for kids, who don't have to wait two weeks or a month to receive money for their contributions.