✨ Allowance 101: Age-by-Age Allowance Amounts for Financial Responsibility

Every parent comes to the point when it’s time to start giving their child money for their allowance. Creating a system that both parents and kids agree on can be challenging, but it is important to model new skills and impart valuable lessons.

Most importantly as a parent, an allowance serves as a way for you to teach your kids how to manage money. A kids’ allowance can also be used as a tool for teaching financial responsibility.

You will need to consider how much of an allowance for kids to pay for encouraging them to develop healthy behaviors around their perception of money. Give too little and it makes no difference, give too much and they don’t learn the true value of work.

Providing your child with an allowance is one of the most basic issues you face when raising kids. Therefore it’s important to understand it and use it as a tool for your child to learn good money habits at an early age.

In this article, we identify a range of approaches to providing an allowance, discuss the benefits and challenges of each and cover the average amounts of allowance given by age.

Let’s dive in.

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What is an Allowance?

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An allowance is an amount of money that you give to a child to spend on whatever he or she chooses. It’s usually (but not always) a weekly amount of money earned through performing specific tasks around the house or at school.

Likewise, parents can also pay money for weekly needs independent of chores, grades or other reasons. These two approaches demonstrate the two primary types of allowance:

• fixed
• chore-based

What is a Fixed Allowance?

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A fixed allowance gives kids money at the beginning of every week no matter how much they do or don’t accomplish throughout the week.

This allowance is typically based on a predetermined amount and it doesn’t change, no matter what happens in the week.

Examples include:

• $10 a week, no matter how many chores are completed.
• $20 every Saturday morning regardless of the child’s weekly behavior or accomplishments at school.

A benefit of a regular allowance is that it gives kids structure and predictability in their lives which can be helpful for organizing tasks and responsibilities.

There is also an upfront understanding of what will be earned, which can make the process easier for kids.

On the other hand, this can challenge some parents who feel that a fixed payment is too low or doesn’t motivate their children to complete chores and other tasks around the house.

If kids don’t do any work during the week, they still get paid on pay day. This runs the risk of fostering a sense that allowance is just money your parents give you to buy what you want, when you want.

But, a fixed amount of income can also teach kids about how to budget, save and set goals on a fixed income. Give your child credit if they can use these funds as an important means for learning about money management.

For a system based on completing chores to earn money, you want to consider a chore-based system.

The allowance that’s based on chores completed uses an earned allowance for kids to teach children how to work for their money. It can be determined by either an hourly wage or a percentage-based system.

An allowance for kids can also be based on meeting specific goals set by the parent.

What is a Chore-Based Allowance?

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As opposed to the fixed method discussed previously, a chore-based system relies on your child performing certain chores each week to earn money for their wallet.

Parents establish an allowance plan with their kids that usually consists of a fixed monthly or weekly amount in exchange for assigned tasks.

One popular option to include in your allowance plan is tasks such as doing the laundry, washing the dishes, mowing the yard and more.

You could incentivize your child to negotiate for more income by taking on additional responsibilities like washing cars, tending to the garden or handling non-routine tasks. This option serves as an extra incentive to your children, and may even improve their work ethic.

A chore-based system will teach your child the value of hard work when employed appropriately and effectively.

In order to establish a well-functioning chore-based system, you’ll want to consider which tasks fit your child’s age. Young children can’t typically mow the lawn, but they can help with other tasks like sweeping or making their beds.

Allowance could be a regular part of your child’s upbringing from an early age that helps to enforce the importance of work and money. Try giving tasks they can do independently, even if not done to an acceptable standard.

Doing so will provide them with a sense of accomplishment and independence, two hallmarks of a financially secure adult.

Related: How Much Should You Financially Support Adult Children

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How Much Allowance Should a Child Get by Age?

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When giving allowance to your child, consider following these three tips: define what an allowance is, how much you’ll give them and create a plan.

Once you pin these items down, you might want to develop a sense of the average amount of allowance money paid by age. With help from a survey conducted by RoosterMoney, we can develop a sense of the approach parents take to sizing up allowances each week.

For the overall age group covered by the pocket money index, ages 4 to 14, the typical kid in this range earns $8.91 in allowance per week. Looked at over a whole year when earned every week, this comes to $463 per year.

Of note, this dollar figure includes more than just the pocket money given by Mom and Dad for completing household chores. It also includes financial gifts for kids and grandkids from family members for birthdays and holidays.

While parents may pay $8.91 per week to the average kid in this age group, kids don’t get the same benefit by age. In fact, a 4-year old earns almost half as much as an 8 year old ($4.18 per week vs. $8.01 per week) while a 14 year old earns almost twice that amount ($13.87 per week).

In fact, as kids get older, they tend to earn a lot more for completing their household responsibilities than when they were younger. For a quick comparison of how weekly allowances vary for kids aged 4 to 14, have a look at the following breakdown from 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

What you pay kids an allowance for also differs and can result in different rates of allowance pay. Likewise, when factoring in the average highest value way of earning cash for their piggy bank, a birthday gift worth $44.75, this pales in comparison to something like a 4 year old making his or her bed for $0.40.

Related: How to Gift Stock to Children and Loved Ones [Tips from a Tax Pro]

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How Much Should I Give My Kid for Allowance?

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If you’d like to give your kids an allowance, set your reasons for giving an allowance and consider the financial situation of your household. What specific financial responsibility skills do you want your kids to learn?

• Ways to spend or save wisely?
• The value of money?
• Why they should develop a solid work ethic?

Once you have a clear understanding of your motivations behind giving kids an allowance, you can decide if it makes sense and then work out how much to give.

After thinking about what you want your allowance to represent, the next important step is deciding how much of an allowance you will give them.

An Allowance Rule of Thumb

Traditionally, kids get an allowance of $1 to $2 per week for each year in age. So, if you have an 8 year old and a 12 year old, you might consider paying them $8 and $12 per week, respectively.

If you live in a higher cost of living area, it might make sense to pay $1.50 per year in age or even as high as $2. In the previous example, that would add up to $12 and $18 per week or $16 and $24 per week, respectively.

Think through your budget and the value you want your kids to appreciate for performing services around the house to earn their keep.

Pay by Age or By a Value-Based Approach

All this said, age alone shouldn’t necessarily be the only means for justifying that you pay a child a higher wage. A more hands on approach that tailors to what services they perform might work better.

For example, you might skip a flat payment per week and instead create a chores chart assigning set dollar amounts for specific chores. Mowing the yard might be worth $20 if you have a big yard, vacuuming the whole home could earn $3 or even $1 for taking out the trash and recycling.

Employ a Sliding Scale…or Not

A sliding scale can make kids more eager to complete their chores. This system, however, has some potential shortcomings.

For one thing, watch out for paying a much higher weekly income than you expected. Your child may be focused on earning money.

A sliding scale of chores and allowance can cause disagreements between siblings by their doing different chores or more than their fair share or generally causing some chores never to get done.

Maybe you mispriced the value of taking out the trash and your kids never bite on your chore chart.

Should You Pay for Good Grades?

As a final consideration for determining how much you should pay to your worker bees intent on building a chore business, you need to factor in whether earning good grades counts as a chore or responsibility.

You might value academic success more than cleaning dishes, meaning your child performs “chores” through studying, taking on extracurricular activities or looking for ways to volunteer and give back to the community.

Further, adding extra cash to their kids debit card or bank account might encourage different results than you’d expect.

But, while seemingly a no brainer to pay for your kids to study at school, they might focus more on the prize of earning more money than actually learning.

Even sadder, if you ever choose to remove this cash incentive, it could dissuade them from performing as hard at their academics.

Figuring out how much money to pay will depend on your kids. As a rule of thumb, providing a general allowance for ongoing chores can do well to bolster their account balance to provide some level of financial anonymity.

You want to encourage some semblance of financial independence and because most kids can’t work until they get a work permit, paying for everything you need to do around the house can help.

It can also develop a healthy habit of keeping a clean house and minding their responsibilities.

Related: How Do Prepaid Debit Cards Work?

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When Should I Start Giving My Child an Allowance?

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When thinking about how to teach kids about money, studies have shown children can understand financial concepts like counting currency by age three. By the age of seven, many of their financial habits become ingrained.

As a result, teaching your kids about money management as early as possible makes the most sense.

You want to encourage and nurture questions they ask about money. When doing so, make sure you match these with age appropriate answers that don’t go over their heads.

Consider starting more involved discussions about money around age five or six, though kids mature at different rates. When the questions start coming, process easy access to your financial literacy and give them credit when they make good choices.

Related: Best Teen-Friendly Debit Cards

Should I Offer a Repeated Allowance?

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Providing children with a recurring allowance lets you establish different best practices around money. Under a repeated allowance or fixed allowance system, parents pay a specified amount of money like clockwork.

What you should aim to do is to make an allowance something positive kids can expect, thereby building trust and instilling a sense of responsibility.

Doing so gives you an opportunity to teach children and teenagers money management skills, while also building sound financial habits.

Under such a system, kids can learn how to budget, save and set goals on a repeated income. This might work better than a chore-based system where children begin to expect a financial reward in exchange for doing a task or chore.

Over the long-term, this might not build the motivation you want.

Instead, it could lead to a situation where a child always wonders what’s in it for themselves, undercutting the true purpose of what a parent hopes to achieve by paying an allowance: creating motivation over the long-term and fostering good values.

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Should Kids Get an Allowance?

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Consistency is key when it comes to doing anything with kids. For an allowance system and plan, this remains doubly true.

Doubtlessly, you find yourself handling numerous family responsibilities and hope to avoid making any costly mistakes along the way.

By establishing an allowance system you follow, whatever you choose, it shows the child the tasks they were asked to do are important and valued by you. When possible, parents should provide direction and reminders if children don’t start tasks on their own.

Also consider how much commitment your family needs prior to starting a system. Choosing one tailored to your situation ensures it will last.

Related: Are You Financially Stable? 10 Signs of Financial Health

Allowance for Kids

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Before you establish an allowance system, ask yourself what your goals are and how much money should be given to kids. For example, what are the core lessons you’re teaching your child?

Consider starting the conversation with your children prepared, and frame it in a way that best serves your goals and objectives.

The main reason parents consider setting up an allowance is to teach their children the value of money, give them a job in the home, and help them accomplish tasks worth doing.

Related: Should You Let Your Kids Move Back Home After College?

Do you want to get serious about saving and planning for retirement? Sign up for Retire With Riley, Young and the Invested’s free retirement planning newsletter.

How to Set Up an Allowance System with Greenlight

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• Available: Sign up here
• Price: Core $5.99/mo. Max: $9.98/mo. Infinity: $14.98/mo. (All plans include cards for up to 5 children)

The Greenlight debit card allows kids to begin spending, but provides parents with peace of mind by giving them control over where their kids can spend money. Parents also can choose to receive alerts that tell them when, and how much, money is spent on the Greenlight debit card.

Greenlight works like a prepaid debit card, allowing you to transfer money onto the card for your child to pay for expenses at approved locations. You can choose how much money to load onto the card, and your child will be cleared to make approved purchases so long as a money balance backs up the card.

If your child asks for extra money to get added to the card, you can have them take a photo of the purchase they want to make and receive your approval. This gives you control and allows you to have discussions with your child about why a purchase might be a good or bad idea. And if your child has a job, they can add their own funds to the card via direct deposit.

The Greenlight debit card is a good choice for parents looking to teach their kids the importance of saving money and making prudent financial decisions. This financial product can be an effective learning tool for helping kids to understand why saving should be a priority and how to simplify paying an allowance or tracking chores. Greenlight has no minimum age requirements for this card, but recommends starting at age 6 or older.

Greenlight boasts numerous other features, too. 

For instance, parents can open an investment account for kids to get their children investing in stocks and exchange-traded funds (ETFs) for the first time.

Greenlight offers monthly savings rewards based on your tier, listed in the box below. You may also set up “Parent-Paid Interest” between you and your child, which allows you to foot the bill and pay interest on accounts for up to five kids.

Any Greenlight subscription also lets users qualify for the cash-back Family Cash Card. Parents can add their teenagers as authorized users to this Mastercard help them learn how credit cards function and establish a credit history. This credit card offers the following cash-back rewards:

• 3% cash back when you spend at least $4,000 in a billing cycle
• 2% cash back when you spend at least $1,000 (but less than $4,000) in a billing cycle
• 1% cash back when you spend less than $1,000 in a billing cycle

There is no limit to the cash back that can be earned, and users can also auto-invest the cash-back rewards.

Each monthly Greenlight subscription includes debit cards for up to five kids. Replacement cards cost $3.50 each but are free the first time. If you need to replace your card quickly, you can get express delivery for $24.99. The company also offers a personalized card, with your own photo or design, for $9.99.

Read more in our Greenlight card review or sign up today.