An allowance is a very influential way to teach children about money and the first exposure they will have with receiving and earning it. We explained in ‘4 Steps to Teach Kids About Money’ how it’s important for children to learn about managing their money effectively early on. Early exposure shapes their attitude towards money and will help them be responsible for it, as they grow older. While there’s no “right” way to give an allowance, let’s have a look at some options.

Do your chores

The concept is straightforward and involves your kids doing chores around the house in return for monetary compensation. Market Watch explains how 53% of parents with young kids give them an allowance. This teaches children the value of money and that in order to make money they have to work for it. Moreover, they learn that their choices have consequences: no work means no money.

This demonstrates how the money for chores approach is very popular with parents around the country. An article by Marcus entitled ‘Useful Tips for Kids’ Allowances’, discussed how they spoke to three parents about their philosophy on giving money to their children. One parent from Annapolis recommended making the children earn their allowance through chores. They noted that this has positive benefits as their older child is much more “money conscious and savvy about money.” But there are some negatives to this approach, chiefly that you’re rewarding kids for doing something they should be doing anyway, like cleaning their room, making their bed or cleaning up after themselves.

Money for nothing

Another approach is to give your child money without requiring them to earn it. The advantage is that any allowance that is given weekly, biweekly or monthly provides your child with the opportunity to manage it on a regular basis. However, the downside is that you may be raising an entitled child and not teaching them that money is compensation for a job well done.

A hybrid approach

A combination of the above two, that yields more benefits for your child is to give them a set amount of money each week, not tied to any specific chore. However, you have to make it clear to them that as a contributing member of the family they are expected to help around the house and do daily chores like making their bed, cleaning their room and doing the dishes. Additionally, you can tell them that if they want to earn extra money, they can do other chores like vacuuming, washing the car or gardening. This approach provides parents an enforceable, real-world way to set up an allowance for their kids. It sets clear expectations and still teaches kids the value of money.

What’s the recommended allowance?

The amount you give your kids will be dependent on you and your financial situation. Forbes details that a good rule of thumb is $1 per year of age: a six-year-old will get $6/week, at seven they get $7 and so on. Give them cash and explain to them what they are expected to buy with their money and what you will pay for.


Written by: Penelope White