Should You Give Your Kids an Allowance?

6 min read
Family decides on how to structure an allowance for kids

Giving your kids an allowance can help them learn vital money and budgeting skills, but parents often struggle with the decision of whether to give them—especially now, when finances may be tight. Your heart may be telling you that allocating an allowance for kids is the right thing to do, especially if they've been asking for ways to earn spending money, but your head may be reminding you of your own limited resources. That’s okay.

The truth is, there’s no universal way to build an allowance into the budget, and there’s no right way to structure it, either. Rather, it’s an individual choice that comes with pros and cons.

To recognize Teach Children to Save Month, we’re taking a closer look at allowances for kids. When you as a parent are secure in the plan, method, and reasoning behind giving your kid an allowance—and are able to talk about it with them—it helps teach the basics about financial responsibility. Ultimately, be realistic and let your goals and resources guide your decision.

Should I Give my Kids an Allowance?

According to a recent survey by the American Institute of CPAs (AICPA), 92% of parents say it’s very important that their children understand how to manage their money effectively, and 66% give their children an allowance.

Besides learning the value of money, an allowance for kids can help set them up on an early path toward responsible saving, spending, and budgeting.

What’s more, the decision to give your children allowances can become part of a larger family discussion about money management, which can open the door to more financial conversations as they grow up. According to investment firm T. Rowe Price’s 12th Annual Parents, Kids & Money Survey, 62% of kids agree that having financial conversations with their parents make a difference.

But giving an allowance isn’t the right choice for every family. Some parents opt out because they worry their kids will only contribute to household chores when there is money involved. In that case, consider offering payment to your kids only for jobs that go above and beyond their normal responsibilities—like washing the car or mowing the lawn. Your kids can still learn how to earn and manage money, but it won’t be tied to everyday tasks.

Others may worry that their own monthly budget can’t sustain the added cost of giving their kids an allowance. If that’s true for your family, don’t be discouraged. There are many alternatives to weekly allowances that can work for you.

What Are Some Alternatives to Weekly Allowances for Kids?

Real-world financial demands may make allowance alternatives more realistic for your family. The good news is that there are plenty of ways to teach the foundational concepts of earning, saving, and spending without the additional weekly expense.

Use play money.

With young children, play money can be used as an alternative allowance to pay for small chores—like tidying their room—or good behavior—like getting ready on time. With every task completed, add the pretend funds in a clear jar that they can visually see. At the end of a week, help them count their loot, decide how much they can “spend,” and how much to “save.” For example, they might cash in 5 play dollars for a scoop of ice cream, or $10 for an extra twenty minutes of screen time. You can even have your kids make the money themselves for an added cute activity.

Create a wish list.

For older children, like tweens and teens, an alternative to a weekly allowance is to encourage them to make a wish list that they can work for. This wish list can include generic things they want to do or a specific plan—like a day trip to the beach or a movie. Rather than giving them weekly funds, save the money you would give them towards their future goal.

Structuring it this way has some benefits: It teaches the basics of financial planning, especially if there is conversation around saving up for the goal, and it instills the notion of delayed gratification, as kids have to wait a longer period of time before receiving their reward. It also lets you teach your kid the concept of earning without committing to a payment schedule.

Make a chore chart.

Make a list of monthly or weekly chores that your kids will check off as they're completed. When all the tasks are done, "pay" your kid with a predetermined reward. This model lets you offer rewards to your kids based on what you can afford. Though you can pay them monetary funds, you can also let them earn extra screen time or dessert, or let them pick the next family activity.

What Age Should I Start Giving my Kids an Allowance?

Children start learning about dollars and cents when they reach elementary school. And at that age, they’re also familiar with the concept of needs versus wants. Because of this, some experts recommend starting to give children allowances early, around five years old, or when they start kindergarten. The AICPA’s Financial Literacy Commission, for instance, notes that the foundations for budgeting – delaying impulse buys and saving for a goal – can start the moment a child voices a want, like purchasing the latest toy or DVD.

How to Structure an Allowance for Kids

To develop kid allowance guidelines that work for your family, first consider your goals. Are you trying to motivate them to contribute to household chores? Or are you trying to teach them how to build a savings account? Perhaps you’d like to lay the foundation for creating budgets with goals in mind, or a mix of all three. Considering the desired outcome before doling out the funds can help you structure how the allowance works.

Next, set some clear parameters. Make sure your kids understand why they’re getting an allowance, how they can earn it, and how they can lose it. These allowance guidelines let you create rules and expectations that your kids will be expected to follow—just like earning money in life. Once these allowance guidelines are set, make sure you follow through.

There is no one-size-fits-all strategy when it comes to structuring an allowance. For example, according to the T. Rowe Price poll, 60% of children ages 8-14 get an allowance they have to earn, 29% don’t get any allowance, and 11% get one without earning it. Some allowances are tied to specific chores or behavior, while others are linked only to extra household work or projects that go above and beyond the basic helping-around-the-house expectations. Some parents earmark portions of their children’s allowances for spending money, future savings, simple investing, or charities of a child’s choice, while others let their kids spend or save it as they please.

Kid Allowances Pros and Cons

As with most things, kid allowances have advantages and disadvantages. Weigh the pros and cons and decide if giving your children allowances work for you.


  • Allows you to create personal finance “teachable moments.” An allowance can be a fundamental way to communicate the value of money and promote a sense of responsibility around money management.

  • Encourages practice budgeting. Budgets require tradeoffs. Learning how to account for income (an allowance), expenses (paying for that new video game), and saving (like for college or an upcoming trip) is an essential skill kids can take into adulthood.


  • Potential to undermine expected responsibilities. Some parents feel that giving kids an allowance may make them think duties always deserve a reward. And linking allowances to chores could end up backfiring—with children choosing to skip the money so they don’t have to take out the trash or fold the laundry.

  • Could cause budget concerns. It may be harder to say yes to children’s allowances if you’re on a fixed budget or have a large family. And that worry is magnified if a child makes poor money choices or spends their allowance on things you’d rather they didn’t have.

What Is the Average for Allowance for Kids?

A report conducted by allowance app RoosterMoney in 2021 found that children between the ages of 4 and 14 earned an average of $7.98 a week. Amounts ranged from $4.56 for four-year-olds to $11.50 for 14-year-olds.

In general, the most widely accepted rate is $1 dollar per week based on their age. In this case, a 5-year-old would receive $5 per week, and a 15 year old would receive $15 per week. But allowance doesn’t have to be based on age alone. For example, funds can be allocated based on weekly chores. Or bonuses can be given on top of a lower base rate when you feel your child deserves it. Most parents do agree on one thing: four out of five parents who give their kids an allowance say they expect their children to work for the money they receive—meaning it’s not free.

When it comes to figuring out an appropriate allowance, the amount may be less important than the financial lessons it teaches, the CFPB advises. Don’t forget to take into account your own family’s budget, and consider making that a talking point when discussing “rates” and “raises.”

You can also consider monthly allowances instead of weekly. This can help your kids learn to budget over a longer period of time or for bigger goals.

The Bottom Line

The decision to give your kids an allowance is a very personal one. If it does work for you, consider gradually engaging your children in the process as they grow. Giving children some say in how they spend, save, and allocate money builds their financial confidence and ability to make intelligent decisions, which can set them up for financial success.

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