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If you’re interested in setting an allowance for your child, you’ve probably already begun to think about how often you should pay them and how much, especially by age. Overall, the amount of money that kids receive varies by family, by frequency, and by chores, among other factors. Because of these, it can be difficult to decide exactly how you want to pay your children an allowance. So we’ve put together the ultimate guide for managing your allowances with your kids and developing the strategy that’s best for you and your family.
What does ‘giving your kids an allowance’ mean’?
Though it seems simple enough, let’s break down what it means to give an allowance for kids. There comes a point where every parent considers this, and you may struggle to create a plan that both you and your child feel satisfied with as there are so many different ways to approach it. The concept is simple, however: giving your kids an allowance means you give them a recurring specific amount of money. Some parents may give their child a weekly or monthly allowance, whereas others may solely give an allowance based on the chores or goals their child has achieved in that time frame.
What are the average allowances for kids by age?
Let’s talk about how much allowance you could give your kids by age. This is a subjective ‘gray area’, where the rule of thumb is to do what’s right for you and your family. However, an age-by-age strategy may be of help to many parents – especially in a long-term plan, or if you have children of different ages.
A common tactic for deciding how much allowance to pay by age is to give your child 50 cents or $1 per week for each year of their age. For example, a 12-year-old would receive $6 or $12 a week, whereas an older teenager like a 17-year-old could receive $8.50 or $17 per week, depending on what you decide.
With that, let’s break down the age groups into three sections, and look at different allowance strategies for each:
Toddlers (age 3-8)
You might initially think that, at this age, children have little use of an allowance. However, it is important to remember that there are benefits to teaching children the value of money early on. When your child asks for a toy at the store, it would help if they understood the concept of money and the difference between wants and needs.
In our digital age, we sometimes forget the value of physical money – for instance the reward of collecting your coins together to buy a new toy as a child. A piggy bank is a safe place for your child to store their allowance and the clinking of coins inside will definitely drum home the importance of saving money.
Young children (age 9-12)
This is the time when it is vital to learn money skills and to get into healthy habits. Kids at this age are a little more mature and need to learn how to be responsible and make smart decisions on their own.
Following the 50 cents to $1 per week for each year of their age rule, children in this age group could be given an allowance somewhere in the region between $4.50 and $12 a week. At this age, they will probably want to buy more expensive things like games and clothes and will be excited to explore their hobbies (which could unfortunately be expensive!). So, naturally, you could increase their allowance.
If you are giving them a repeat allowance in exchange for completing chores and goals, then this should be factored into the amount of allowance you give them. Completing chores and goals for an allowance will teach children responsibility by earning their money, and by giving them a repeat allowance, they can save it for bigger purchases they want to make.
Teenagers (age 13-18)
For teenagers, an allowance is likely to be a little bigger than an allowance for younger children. Following the rule, an allowance for kids aged fifteen could be between $6.50-$18 dollars a week.
As teens, the decisions they make will likely have greater consequences, so solidifying their earning, spending, and saving skills will be vital at this point in their lives. In particular, your child may be saving for college, so the allowance you give them may be more important to them than you initially realize.
Should kids be given an allowance?
You might ask yourself whether you should give your kids an allowance or not. It’s a hot topic among parents who want to do the right thing for their children. It is imperative to consider the ways in which an allowance teaches children healthy money habits and how it can impart valuable financial lessons, especially if allowance for your kids is chore-based. Why wait until your child is old enough to legally make money through working, when they could be learning valuable life skills from a younger age?
The benefits of paying your children an allowance
There are many benefits to paying your children an allowance. Some include:
- Kids can learn the relationship between work and pay
Giving your child an allowance based on the chores they complete and the goals they reach can be a great way to teach them the relationship between work and pay. They can learn how to earn money for hard work, giving them the opportunity to grow in responsibility.
- It gives kids money for non-essential items such as toys and video games
By giving your children their own money, you are giving them the opportunity to learn to spend and save. Buying things for themselves that they enjoy can expand their creativity and make them happy – all while learning important life skills that buying things for them would prevent.
- Incentive
An allowance for kids is a great way to incentivize them to negotiate for more money by completing more chores and goals. This teaches kids to work hard to earn money and to push themselves further. By having this flexibility in your allowance strategy, you can give them extra motivation to work harder to reach their goals.
- Find out what money can buy
Making purchases can be a great way to teach kids how to be confident around money, especially if they saved it up themselves. Additionally, if there is a larger purchase they wish to make, such as a $50 video game, they can ask you for help. You can break down this goal, set up a plan for the next few months, and put into perspective how they should save for a particular purchase.
- Teaches kids about finance
Giving kids an allowance is a fantastic way to give them hands-on experience with managing money from a young age. Not only will this teach your child confidence, but with a repeat allowance you are setting your child up for learning how to budget, save, spend sensibly, and reach a financial goal. This is a great way to put your child on the correct path to making smart financial decisions as an adult. If this is important to you, you can check out our guide on how to teach kids about saving money.
Allowance for teenagers
Setting and managing an allowance for teenagers may be a little more complex than for younger children. There are more things to consider, such as when should you stop giving them an allowance? Is there such a thing as ‘too old’?
Well, the answers to these questions depend on your situation and relationship with your child. A way to determine how much to pay your teenager could be to find out how much your kid’s friends and classmates are getting, or you can be more precise and estimate how much your child would need for things like clothes, books, and going to the movies. Each child and family is different!
In deciding when to stop giving an allowance for teenagers, you should ask yourself whether they need it. If they’re saving for college, it might be a good idea to continue until they no longer need that little extra bit of financial help. However, if your child decides to work full-time, then you could consider lowering or stopping the allowance fully, if it seems right to you and your child.
The baseline is to figure out the balance for your family. And you can always talk to your teen directly about it; they may appreciate negotiating options with you and being treated like an adult.
FAQ Section
- Should I pay my kids an allowance for completing chores?
Paying your child an allowance for completing chores can be a great way to teach your child how to earn money. It also teaches them the realities of working for pay, because if the chores don’t get done, they don’t get their allowance!
- What type of chores could I have my kids complete for an allowance?
This largely depends on what age they are and their ability because different chores will be better suited to different children. For example, for a younger child of about 6 or 7 years, chores such as putting away toys, wiping the table, and watering the plants can be great small chores that aren’t too difficult, but can still be satisfying when completed. For an older child between 9 and 12, some more difficult chores such as sorting laundry, washing up, and carrying in the groceries can be good goals to set for an allowance. For an older teenager, you could set chores that are more independent such as walking the dog, taking out the trash, or even helping prepare dinner.
When it comes to setting chores for kids to complete for an allowance, there is no better way to do it than Invstr Jr! It’s the money management and investing app for kids and families where your kids can learn how to become money savvy! You can set goals for your kids, give them an allowance, and can teach them financial literacy.
- How often should you pay your child an allowance?
This is another of those gray-zone areas. Whether you give them an allowance weekly, monthly, or bi-monthly, the key is do what is right for you – but be consistent! If your child does not complete their chores properly then they do not receive their full allowance! The goal is to teach your child how to be responsible – not to spoil them unnecessarily. That being said, offer them the chance to make up for their lost cash!
- How to help your kids save and invest their allowance?
Invstr is the ultimate tool for your family’s finances. The investing app for minors helps you teach your kids how to save effectively and manage their money. You can put money into their account directly as an allowance or a reward for completing a goal. In fact, Invstr Jr has an option to set a goal for saving money! Wow!
Invstr Jr is also a custodial account. This means that your child can learn how to invest with our award-winning Academy and buy and sell their favorite stocks and crypto. The younger they start, the greater the reward can be!
Conclusion
All in all, an allowance can be a great way to set your child up for success. The more you talk about money and finances, the more confident your child will be in managing, saving, and spending money. Ultimately, the specifics of your strategy will be unique to you and your family, but we hope that this guide will help you make some of the tough decisions so your child can reach their full potential when they have to manage their own finances as an adult.
All investing involves risk and can lead to losses.
Past performance does not guarantee future results.
Invstr Financial LLC (Invstr) is registered as an advisor with the SEC. Securities trading is offered to self-directed investors by Social Invstr LLC, a member of FINRA.
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