Allowance Basics

Starting an Allowance

No particular age is best for every kid, but consider starting an allowance by the time a child is 10 years old. By then, most kids have had experience making thoughtful spending decisions but still look to parents for guidance.

How much allowance should you give? It depends on your financial situation and what kind of commitment you feel that you can comfortably keep. Experts generally recommend that kids get 50? to $1 per week for every year of their age — $4.50 to $9 for a 9-year-old, for example.

Regardless of how much you choose, give the allowance regularly and increase the amount as your child gets older.

Allowance and Chores

Should an allowance be tied to chores? Again, it's a personal choice. Some experts think that it's important to make this connection so that kids learn the relationship between work and pay. Others say that kids should have a responsibility to help with housework, above and beyond any financial incentive.

Ultimately, you must decide what works best for you. Whatever you decide, be sure that all parties understand the arrangement.

If you give an allowance for doing housework, make sure that your kids understand what their responsibilities are and the consequences of not doing them. You might want to involve them in choosing the chores and then keep a chart posted to remind them what needs to be done.

It's important to be consistent. Following through on your promise to give a regular allowance sets a good example for your kids and is incentive for them to honor their end of the bargain. If you don't keep up with the allowance, they might lose that incentive and stop doing the chores.

Using an Allowance

How should kids spend their allowance? It's good to have them use it for discretionary things, not essential purchases such as food or clothing. This lets kids make buying decisions — and mistakes — without dire consequences.

You might want to encourage kids to put away a portion for charity and another portion for savings. If so, let them choose where to donate the money. It may be a cause that a child can relate to in some way, like an animal shelter or a group that helps sick kids.

If some of the allowance goes to savings, consider setting up an account at a local bank. This way, your child can keep track of the money. Many banks offer special bank accounts for kids, and yours may enjoy the experience of getting mail, even if the mail is a bank statement.

Beyond Allowance

Once kids become teenagers, you might want to provide a quarterly clothing allowance in addition to the weekly allowance.

If you do, establish a reasonable budget and allow your kids to spend it as they wish — but also to honor its limits. If your son chooses to buy a $95 shirt or your daughter opts for a pricey handbag, for example, they might have to make compromises on other clothing choices.

Reviewed by: Steven Dowshen, MD
Date reviewed: July 2011