Allowance Basics

An allowance can be a great way to teach kids money management skills and help them learn how to make decisions, deal with limited resources, and understand the benefits of saving and charitable giving.

There's no single correct way to handle giving an allowance. Deciding when to start, how much to give, and whether you want to link the allowance to chores are choices that should fit your family.

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.