An Age-by-Age Guide to How Much Allowance to Give Your Kids

When it comes to teaching kids about money, few tools are as simple and effective as an allowance. More than just a weekly payout  that kids can spend however they want, an allowance can become a lesson in responsibility, independence, and budgeting if handled correctly.

For many children, it’s their first experience receiving money of their own. It might also be their first unofficial savings account, depending on what guidelines parents set up, and if it comes with the condition of doing chores or other tasks, learning what working for a reward means. 

If parents value giving their kids a strong foundation for lifelong financial literacy, an allowance is one way to start. So, if you’re on the fence about the benefits and pitfalls of giving your kids an allowance and how much is appropriate, read on to learn whether or not it’s the right choice for your family. 

Reasons to Give Kids an Allowance

One of the most convincing reasons for giving kids an allowance is because it helps them learn essential money management skills through real-world experience.

“If the allowance is tied to work around the house, it can help them learn about the relationship between work and money,” says Keith J. Peterson, senior vice president and financial advisor at D.A. Davidson, an investment banking company. “It can also help the kids start to understand that money is limited. It’s hard for kids to understand that when their parents are simply swiping a piece of plastic, and getting something, that there’s hard work and sacrifice on the other end of that swipe.”

He recommends if you do give your child an allowance, giving it to them in physical cash (at least while they’re young; the medium can change when they get to teenage years) so they can experience giving this money away physically in exchange for an item. 

But even if you decide giving an allowance on a particular schedule, like a weekly allowance, the money should be tied to completing household chores or other tasks that teach responsibility.

“The majority of financial education is left up to the parents, as generally, schools won’t provide this,” Peterson adds. “Whether you give an allowance or not is a parental decision, but the most important thing is to find some way to educate your children about money so they don’t enter the real world blind to the impact, both good and bad, money can have on their life.

Here’s a few more reasons why an allowance can be beneficial: 

• Money management: Giving kids an allowance at a regular cadence of your choose may help your kids learn how to budget, save and spend wisely from an early age—especially if they are encouraged to use that money to save up that money for a big ticket item you insist they pay for on their own, like concert tickets. 
• Encourages responsibility: When kids manage their own money they learn very quickly the consequences of their purchasing choices. Parents might allow their kids to use their allowance however they chose, like on new school clothes, while reminding the that once the money runs out, they won’t get more until the next scheduled pay date. 
• Fosters independence: Having their own money empowers kids to make independent purchases and can build confidence. Maybe they can buy the snacks they want, if their parents don’t stock them in the pantry, or grab that new pair of shoes, if their parents require saving up before buying new items of clothing. These choices help kids feel in control and in charge of their own lives, good preparation for when they don’t live at home anymore. 
• Introduces delayed gratification: Saving up or working for something they really want can teach children patience and planning ahead. If parents create guidelines around what kids can buy with their allowances, which they might want to do with younger tweens, they can encourage kids to build up savings or aspire to purchasing a product of their wish list rather than relying on their parents to buy it for them. 
• Builds decision-making skills: Deciding how to use their allowance helps children practice making responsible choices. Parents might want to put guidelines around how kids spend their allowance—for instance, they can use it for school clothes or video games, but not for beauty products, or whatever rules align with their values. But they might also want to allow kids to make mistakes with how they spend their money (like spending it too quickly on something they don’t need) to prepare for how to spend their own money in the real world when the time comes.

How Much Money Should You Give?

Peterson admits that this is always a challenging question for parents to navigate and it can depend largely on your own personal beliefs and financial situation. You also may want to consider your family’s size and the age of each child. Some families with many kids might find it easier to give every child the same set amount so no one feels short-changed. 

On the flip side, some families might find it more beneficial to give older children a higher allowance because their chores are more labor intensive. 

“We have a two year old, so we’re not quite to this point in life yet, but my plan is to give her a flat, no strings attached amount of $1 times her age per week [at age 5 she’ll get $5 a week, for instance],” he says. “On top of that, she will have extra jobs, on top of her household chores, that she can do to earn extra money. 

Allowance should be tied to tasks or chores

Petersen adds that no matter how much the gives, the money is always attached to the completion of maintaining the household. He explains that, for instance, letting the dog out to go to the bathroom or filling their water bowl might be considered a chore, but picking up poop in the backyard is a job they can earn extra for. 

“You can determine your own rates for these tasks, or I plan to pay about 30-50% of what I could hire someone else for, since it’s generally easy to find out how much you would have to pay someone in your neighborhood to pick up poop, mow your lawn, or rake leaves,” he adds.

How Much Allowance Should Be, By Age

Ages 4–6:

• Amount: $1–$3 per week
• Structure: A small, consistent amount given on a set day (ie. every Sunday)
• Tip: Use jars or envelopes labeled “Spend,” “Save,” and “Give” to show basic money categories

Ages 7–9: 

• Amount: $3–$5 per week
• Structure: Allowance can be tied to small chores, like making their bed or feeding pets or given on set a date on the condition that their chores are completed.
• Tip: Encourage saving toward small goals like a toy or game, and let kids handle small purchases themselves when you’re out with the family. For instance, if you’re going to a carnival, make sure the kids bring their allowance with them (you might consider gifting them a wallet to encourage them to store their own money safely) and have your child purchase the snacks of their choosing.

Ages 10–12: 

• Amount: $5–$10+ per week, depending on responsibilities
• Structure: Include as a condition with their allowance that they are responsible for covering certain expenses like snacks, gifts for friends’ birthdays, or school supplies. This way kids begin to learn how to spend their money not just on the things that they want but also they need—which will be their first attempt at making their own budget. 
• Tip: Start using a simple allowance tracker or app to monitor spending and saving habits, and share it with your child so they can see how much they are spending and on what. 

Ages 13–15

• Amount: $10–$20+/week, with added responsibilities that can pay more (like babysitting siblings or wedding the garden)
• Structure: You can still give kids an allowance on a scheduled basis, or you can give your child a set amount of money, at say, the beginning of the month and help them budget for certain items they want, like school clothes.
• Tip: Involve them in managing a personal budget, including clothing or entertainment and have them work towards saving for a larger item like a prom dress or concert tickets. 

Ages 16–18

• Amount: Based on actual needs, potentially including income from part-time jobs. For instance, you can decide how much they would need to save up for a car for a year, and contribute a certain amount of your choosing to the total each month. 
• Structure: The goal is to manage larger budgets, possibly with parental oversight or guidance. They might start depositing more in a savings account for long term goals, like college tuition or a car.
• Tip: Encourage opening a student bank account and discussing topics like credit, interest and taxes—help them potentially sign up for a credit or debit card as well.

Are There Any Downsides to Giving Kids an Allowance?

While setting up an allowance might be the first step in teaching your child financial literacy, there are a few key pitfalls you might want to consider before taking this route. 

“I think the biggest downside is that the child may get used to money coming their way regardless of work level or that they should get paid for any household chore, in the case of a chores based allowance,” says Peterson. 

In addition Peterson has also found that, “an issue many parents run across is that kids may have different money habits than they do (i.e. kid is a spendthrift vs. parents are savers) and we have a tendency to want our kids to manage money the same way we do.”

He says that if you have multiple kids, there’s also a high probability both kids won’t save and spend the same way either, which can create some conflicts if one kid is spending all their money right away, and another is saving for other items. Parents will need to manage any conflict that might arise as a result of siblings who are close in age having access to different amounts of money. 

“Overall though, I think this is representative of the real world where everyone has different money habits, so letting them experience this in a controlled environment when they’re young is worth any minor consequence,” he clarifies.