Allowance: When and How Much?

It begins at an early age–your 3-year-old sees a commercial for a shiny pink unicorn that sprays glitter from its mouth and decides SHE. MUST. HAVE. IT.

It continues as your 7-year-old sets his eye on a LEGO set that not only has 2,000 pieces but a $200 price tag.

And then, it culminates when your teenager insists, “EVERYONE has their own car. I need one too! And look–this one is ONLY $8,000.”  (Insert parental eye roll here.)

If you’re like the majority of parents, you want to give your kids the world–both by providing them with opportunities AND with tangible gifts. But–also like the majority of parents–you know what a delicate balancing act it is to fulfill your child’s deepest desires and teach them gratitude and financial responsibility along the way.

Sure, we all want to raise financially responsible children, but what’s the best way to teach them those skills in our consumeristic culture? In a world where money equals power, it’s increasingly difficult to raise grateful children who not only understand the value of a dollar but know how to spend that dollar wisely.

I’ve been a parenting educator for 15+ years and have seen thousands of frustrated and perplexed families who just didn’t know how to deal with the topic of allowance.

When should we start?

How much should we give?

What are the pros and cons?

Should I pay my child to do chores?

I get it. I asked those exact same questions when my sons were growing up.

What is Allowance?

Before we dive into the questions I posed above, let’s get clear on some semantics.

Allowance is NOT Payment

Oh boy. This is where it can get tricky. Most parents position allowance as a “pay for performance” agreement right from the start. If the child does the chores, gets good grades, behaves appropriately, etc.–they get paid.

Simple, right?

Actually, no. Take a step back and look at it from a kid’s point of view:

“Mom and dad set up a system where I get paid for doing something I SHOULD be doing anyway. Awesome! Let the negotiations begin! Now, I know that every time I’m asked to do something, I can leverage that task into cold, hard cash! Yay!”

See what happened there? You’ve set up the perfect scenario for your kid to ask, “What’s in it for me?” Totally the opposite of what you really wanted.

Many parents use allowance like a reward or a payment for completing a task. But research has shown repeatedly that rewards are not an effective long-term solution for motivating children.

So what DOES work?

Allowance IS a Training Tool

By definition, allowance is an offering or an established amount independent of any external factors. Allowance is given on a non-conditional basis.

It’s meant to help your kids learn valuable lessons about how to handle money responsibly – how to spend, save, give and invest. As kids get older, they get to handle more of their finances independently so eventually (when they move out of your house), they are fully competent in all aspects of fiscal responsibility because they’ve been doing it all along.

Allowance is also a great way to remind your children you’re not an unlimited ATM that can be accessed when they see the newest and greatest gadget on the market. By giving your children an allowance, they will learn quickly that if they want something, they can save for it.

Allowance is NOT Tied to Chores

Before we talk about WHY you shouldn’t pay kids to do chores, let’s talk about the reasons parents DO pay kids for helping out around the house.  

  1. Parents think this type of compensation models real life–after all, you get paid to go to work. Why shouldn’t kids get paid for the work they do around the house?  
  2. We want kids to learn to work hard and understand the value of money.  

On the surface, that all seems to make sense, right? It was probably the way you were raised and maybe the way you’re raising your kids.  

However, paying kids to do chores (even when it’s set up as an allowance) actually does more harm than good.

Let me share 2 big PROBLEMS with paying kids for completing chores:

      1. It creates the expectation that kids should get PAID for helping at home. You may get paid for going to work, but you don’t get paid to grocery shop, make meals, do laundry, do yard work, or clean bathrooms.  We do those things because we’re part of the family and those jobs keep the family running. Let’s be honest. Our kids aren’t going to love doing household jobs–and neither do we–but it’s important they know their contributions make a meaningful difference in your family.
      2. It’s the slipperiest of slopes. Once you decide you’re going to pay kids for helping out, what do you do if only some of the jobs are completed? What if the job is only substandard? Do you pay ½ of the allowance? Do they lose it altogether? What if you ask your kids to do jobs that are outside their normal household tasks or responsibilities? Are you going to pay them for those TOO? Because of this slippery slope, parents get so frustrated with the whole system that they either ABANDON the allowance or–more likely–they keep PAYING their kids but stop asking them to help out b/c it’s just not worth listening to the backtalk and the lackluster cleaning.

When parents tie allowance to chores, they inadvertently commercialize the way the home functions. But the truth is homes aren’t businesses. Home is not the place children need to learn how to climb the corporate ladder or how to negotiate a contract.

Quite the opposite. Home is where children learn that everyone needs to contribute for the household to function. Family life is a team sport, not an entrepreneurial endeavor.

To make this a reality, it’s time to send the word “chore” packing. It invokes a foreboding sense of hard labor, dirty work, and drudgery–not a sense of worth and significance.

Instead, start having conversations with your kids about Family Contributions.

By making this small switch in your family vocabulary, you reinforce that their work makes a difference for your family. It reminds them that they are a vital part of the family, and without their important contributions, the family would not function as well. You create a new family norm where everyone has a role to play to keep the household running effectively.

When everyone is pitching in, things get done faster, there’s less stress, and each member of the family begins to see and feel their significance as an important part of the whole.

By shifting your language, you empower your children to help instead of forcing their hand to get tasks done–teaching self-worth, the value of contribution, and the importance of teamwork.

How’s that for a win-win-win?

NOTE: If you have been using allowance as a “carrot” to entice your kids to actually do their family jobs, Sessions 3 and 4 of the Positive Parenting Solutions® online course is FILLED with strategies to get kids to do what they’re supposed to do–without any reminding, coaxing, bribing or payment on your part.

When Should You Start Giving Allowance?

I usually recommend giving children a consistent allowance as soon as they are able to understand that money is necessary to purchase things they want–this usually happens around 4 or 5.

Even if your child doesn’t understand the value of different money pieces yet, it’s never too early to start learning. By elementary school, at the latest, most kids are able (and excited) to manage a weekly allowance.

How Much Allowance Should You Give?

There are many schools of thought on this question. Some parents use the $1 per year rule–one dollar per week per age year. So, a seven-year-old might get $7 per week.

However, to make the most educated decision about allowance for your kids, start by considering these questions:

What do I expect him/her to buy with that allowance?

What does that look like for your set of family values and budget?

Do you expect them to save part of it?

Do they have to use part of it for charitable contributions?

Are they expected to pay for their own activities? Lunch? Treats?

By considering the questions above now ask yourself, how much will he/she reasonably need to do that? (Factor in that they also might get monetary gifts from relatives throughout the year as well.)

Also consider how much YOU are paying for all the “extras” now. If you spring for a smoothie every week after practice, consider giving that amount to your child as a portion of her allowance. That “treat” becomes part of the “expenses” she is now responsible for managing.

You may find she only buys smoothies every other week because she wants to save that money instead. She is learning at a young age to make decisions about immediate gratification versus saving for something she wants in the future. (In contrast, if you were still footing the bill for smoothies, I guarantee she’ll want one every time!)

In the teenage years, consider giving a lump sum (not too much) for the purpose of buying clothes. The child can make the decision on how that money is spent. She can buy one pair of designer shoes or three pairs of fashionable, yet reasonably-priced shoes. Once the money runs out, that’s it. Do not give in and “float a loan” until the next allowance date.

Again, this is essential training in making decisions about how to manage limited resources. If resources are unlimited (bank of mom or dad), we rob her of those important learnings.

Lastly, consider the question, how much will make him/her just a bit uncomfortable?

We don’t want children to be too comfortable or flush with cash, as they’ll lack the incentive to find ways to make money! If the amount given is enough to purchase pretty much anything on their current wish list, there’s no lesson to be learned.

Make the allowance payment enough that it covers expectations (donations, app purchases, etc.) but not so much they won’t have to save for something special. Delayed gratification is an important thing to learn.

As for teens, less money is actually better than more. It will be a catalyst for their desire to get a job and even a deterrent for spending money on things they don’t need and aren’t good for them, like vaping or drugs.

Now that you’ve decided how much to give, it’s important to teach them how to manage their allowance responsibly.

Tools for Managing Allowance

Like anything else, managing money takes guidance and practice. Here are four simple strategies to help make learning this life skill easier:

1. Be Consistent

Whether you decide to pay weekly for younger kids, or monthly for teens, be consistent.  This way they’ll know when they can count on the money–in the same way we depend on our employers paying us consistently. When allowance is given randomly, there is no incentive for children to get organized about managing their money.

2. Equip Them With Tracking Tools

These days, there’s an app for everything! Money management apps work well for teens. Simple worksheets are best for younger children, or even different piggy banks with different categories. I love The Moonjar for preschool and elementary ages and the Mint app for teenagers!

3. Have Open Conversations

Like talking to kids about sex, talk early and often about finances. Get them involved in budgeting when shopping as a family. Give your kids a budget for school supplies each year and let them comparison shop for the best deal. Of course, any money they save as a result of their research, they get to keep–which only reinforces the lessons of doing your homework before making purchases. Lead by example and make saving money a game. Parents rave about the Savings Spree app for kids ages 7+. It makes learning about money fun and educational.

4. Say No to Handouts or ‘Floater-Loans’

This might be tough–especially when the whining, begging, and pleading reaches all-time highs–but let kids face the consequences if they don’t have enough money to purchase a previously agreed-upon item. It’s easy to get lulled into a “just this once” plead from your child but “once” turns into every time very quickly. When that happens, all the positive lessons you’re trying to teach go right out the window with your hard-earned cash.

Jobs For Hire

There is one last piece of the allowance puzzle that reinforces planning, entrepreneurial drive, and a sense of personal accomplishment–and that is Jobs for Hire.

As I mentioned before, allowance should never be tied to Family Contributions.

However, there are some cases where paying your child to complete a task is appropriate and will instill those hard-working values parents so desperately want their children to grasp. For example, if your kids are saving up for something big and they want to earn extra money. You can HIRE your kids to do certain jobs.

If we had more time, I would teach you a step-by-step guide for allowance that teaches little kids up to teens how to manage money AND makes SURE you never have a case of entitlement in your house. (I cover that IN DETAIL in the Positive Parenting Solutions® online course.)

But for now, you should know kids can “earn more by doing more” when it meets the following criteria:

      1. The possible Job for Hire falls OUTSIDE of their normal responsibilities.
      2. They’ve already done their normal, expected family responsibilities. (If you have to constantly remind your kids to do the expected jobs, they’re not ready for a Job for Hire.)
      3. The Job for Hire offers a significant contribution to your home – it’s something you are willing to pay someone to do so you don’t have to do it. For older kids, maybe it’s power washing the driveway, or for younger kids, dusting blinds or baseboards.
      4. They only get paid if the job is completed to your previously specified expectations.

Final Thoughts

Separating allowance from Family Contributions is a tough concept for many parents to grasp at first. Once you do, and you start facilitating conversations about both, you’ll begin to see how incredibly valuable allowance and contributions are to raising responsible, respectful children.

In a world where entitlement truly does feel like it’s reached outrageous proportions, it’s more important than ever to teach kids boundaries and expectations. With the right tools and training for both parents and children, you can avoid some all-too-common traps that lead to out-of-control entitlement behavior and attitudes.

I invite you to learn more about Positive Parenting and raising UN-entitled kids in my most recent book, The Me, Me, Me Epidemic: A Step-by-Step Guide to Raising Capable, Grateful Kids in an Over-Entitled World. 

Me Me Me Epidemic Book Cover

In addition, I’d love for you to join me for a FREE ONLINE CLASS. I’ll teach you how to get your kids to listen–no nagging, yelling, or reminding required!

As always, happy parenting. We’re here to help!

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About the Author

Amy McCready
Nationally recognized parenting expert Amy McCready is the Founder of Positive Parenting Solutions® and the best-selling author of The “Me, Me, Me” Epidemic - A Step-by-Step Guide to Raising Capable, Grateful Kids in an Over-Entitled World and If I Have to Tell You One More Time…The Revolutionary Program That Gets Your Kids to Listen Without Nagging, Reminding or Yelling. As a “recovering yeller” and a Certified Positive Discipline Instructor, Amy is a champion of positive parenting techniques for happier families and well-behaved kids. Amy is a TODAY Show contributor and has been featured on The Doctors, CBS This Morning, CNN, Fox & Friends, MSNBC, Rachael Ray, Steve Harvey & others. In her most important role, she is the proud mom of two amazing young men.