Allowance: Show ‘em the Money

PSP members share their two cents on what you need to know about allowance


 Original poster asks:

"About three months ago, my son started asking me about the possibility of having an allowance. I was both pleased and a little wary having only recently dealt with the complex conundrum of tooth fairy rate inflation. What’s the going rate in Park Slope? Should he be doing chores in exchange? Was this an opportunity to teach him something about money and if so, what? Would we need to get into credit default swaps? Toxic assets?"

Here are the tips....




On Chores and More

  • "There are two basic philosophies when it comes to allowance and chores. One school of thought holds that kids shouldn’t actually be paid to help out around the house. They should be doing that anyway. It’s not hard to imagine a kid declaring that she will forego her allowance this week so that she can doesn’t have to clear the table. Other people like the leverage that “no help, no allowance” provides, whether attached to specific chores or not. Finally there’s a sort of third way in which allowance is not pegged to chores but may be deducted, say $1 at a time, for bad behavior."
  •  "Also, I'm a firm believer that you don't pay kids for chores. Chores are a part of being in a family."
  • "I keep allowance separate from chores, and here's why. Doing things around the house is not something, in my opinion, any of us get paid for. We do it because it's our personal responsibility, because we're a part of a "community" (or family) and when one is a part of a community you step up to help out. Because taking responsibility for ourselves is something I think it's imperative for every child to do, and we keep our house clean because it's healthy and makes sense to do so-- not because we're bribed or paid. So my daughter has things that are expected of her: make her bed, clear her place at the table, put away clean, folded clothing each week, help me walk the dogs, etc, because she's a part of this family and we all pull our own weight as it's age-appropriate, and as we can find ways to chip in. And she gets allowance because I think it's important for her to learn about saving, budgeting, and being responsible financially."


On Lessons and Learning Fiscal Responsibility:

  • "There are all sorts of lessons kids can learn from their allowance. One mom described how her parents had an NPR-style matching fund policy with her allowance, doubling it if she saved it for a given period. This continued right up until college, which meant she had a nice nest egg to take along with her. Of course paying in coins goes hand in hand with the elementary math curriculum, teaching kids to count by ones, fives, tens, etc. One parent described how her son’s fevered calculations as to how long it would take him to save up for the LEGO “Death Star” have given him a leg-up in 1st grade math. Then there are all the lessons about priorities, whether it is better to all ones allowance to buy crappy five minute cars from the drugstore or to save up for something really sturdy and spectacular - and they take better care of things they've had to buy themselves. Allowance also make it possible for kids to give to charities that capture their imaginations or to buy gifts for people they love."
  •  "I recommend The Opposite of Spoiled by Ron Lieber—good book talking about things like saving, spending, giving.  Brings up some great points I hadn’t thought about—we had a few different book groups around the book."
  • "I went to Ron Lieber’s “The Opposite of Spoiled” event at the Park Slope Library and he had some good things to say about allowance: not based on chores, dollar (or $.50) a year; have save/spend/give jars; increase responsibility with money as kids get older, making them responsible for things like clothing, art supplies; failure with money as a kid is a good lesson and may help them avoid it later in life. He also talked about gratitude (and how it’s tied to giving) that I really like. Here’s some more info based on his Slate article."
  • "I also highly recommend The Opposite of Spoiled! As they got older and now as young adults, our kids were interested in our finances. It was a pretty interesting topic for them. The classic vacation car ride question was, "Where did the money go in the depression?" They were interested in exactly what happens at the bank. What is a mortgage? How much do we save? What does gross and net mean? We made decisions about charitable contribution decisions as a family. I have always worked hourly or as self employed so we were very conscious of money in/money out. Paying off credit cards and the impact of mounting credit was always something that I just talked about whether they wanted to hear it or not. They had debit cards in college. When they finally got real credit cards they were so freaked out in the first month - they were paying them off daily (maybe I went a little overboard on the credit thing). One of them made a budget spread sheet that has proved to be a miracle for saving for them and their friends. Talking about sex and talking about money can be thorny subjects but you have to do it early and often."


Tracking allowance:

  • Allowance Manager: "We use allowance manager—an app that adds allowance to a “bank” that they can pull from (with oversight) when they want."
  • Moonjar




  • "Standard pricing seems to be $.50/year for the age of the child (ie. child is 6, child gets $3)-$1/year for the age of the child (ie. child is 6, child gets $6). There are variations in between this, particularly as the kids get older."
  • "For about 2 years now, my son (now 10+ years old) has been getting a $5 a week allowance. (We have not done a cost-of-living increase over that time.)    He has chores that he has to do throughout the week, but they are not tied in any way to the allowance. If he doesn't do his chores there are repercussions, but they don't affect his allowance.   Our arrangement is that the allowance is to teach him the value of money, the tradeoffs that come with having limited funds, the responsibility to safeguard money, the importance of savings and the importance of generosity.  Of the $5 he is supposed to put a portion, $1, in the bank for college, and he's supposed to give $1 to a charitable cause of his choosing. We don't keep tight track of it, but it looks like it comes out about where it should at the end of the year, with him having spent about $150, having $50 in his piggy bank and having $50 that he more or less recalls having given to various needy people or causes.  He's allowed to spend the money any way he wants, including on Pokemon cards, video games, school bake sale, the Scholastic school book sale, loaning or giving money to friends, and even buying candy.  It's interesting to see the choices he makes. With the charity portion, sometimes he gives all $5 to a homeless person, and sometimes he doesn't give anything to any charitable cause for weeks.   He seems to really enjoy the independence of having money, making decisions about the money, and not being judged on how he spends the money. I often tell him that I would not have spent money in some way that he has, but try always to remember to say at the end of that "but it's your money to spend how you wish."  $5 probably is a little low for the going rate, but my husband and I also buy most of the things he needs. So it seems like $5 is the right amount to accomplish with the allowance is supposed to, namely, give him a sense of what money is and the power and responsibility it carries  Before the allowance I think things like savings and budgeting were really abstract for him. This allowance exercise seems to have helped lay the groundwork for him to be responsible and have a healthy relationship with both spending and saving.  Incidentally, we also have a five-year-old, and he has not asked for an allowance, though he knows that his brother gets one, nor would we give it to him if he did ask for it. The allowance is a teaching tool at this point, and he seems too young for that lesson.  I'll be interested to hear how others handle this. I'm sure there are many great approaches to helping kids grow into fiscally responsible adults."


  • "About six months ago, we started giving our 7-year-old daughter an allowance. After much debate, we started her off at $1.25 per week, which seems enough for her to buy the occasional stuffed toy she wants. We keep her money in a little "bank" we set up that pays 4% interest monthly to give her an incentive to save. Periodically, she adds more from lemonade stands, extra chores we pay her for, gifts from relatives, etc. She can withdraw as much as she wants, anytime, for any reason. Right now, she has a balance of $25 in her account and is mulling her next move (earn more, save more, or spend more). We may increase her allowance later - it's always easier to give a pay raise than a pay cut! - but now this feels about right as she begins to learn the value of a dollar. Update: Just as I was about to send this, she blew the entire $25 on four stuffed animals, so she now has a zero balance. Well, it's her money. Now she will learn how to save!"
  • "For my 11 year olds: $5.00/week and they  have to empty dishwasher, fold laundry and walk the dog."
  • "I have an 11 year old. We give her $5/week, which she usually uses to buy lunch once a week (her school allows kids to go outside). One of her grandparents gives her cash for her birthday. She has to keep a written account of what she buys with that (builds basic book-keeping skills) and ask before she can buy anything with it. She sometimes uses it to supplement pocket money to buy a treat or to buy something she really wants."
  • "We give $5/week to our 10 year old. She doesn’t eat out so lunch isn’t part of the equation. And it's not tied to chores.   We set it up so she puts some money each week into different “pots”, one for donating to a charity or cause of her choice, one for “long term savings” to be spent on a “bigger” item she wants (last nice sum she saved went to her hair color, other things she’s spent on: accessories for her dolls, books, art, souvenirs when we travel), and one pot for daily spending such as snacks and other little things."
  • "In middle school, we started giving our daughter $10 a week.  We usually dole it out $20 twice a month and she has to budget it.  Lunch isn't part of the equation.  Her school doesn't have out lunch but I would expect her to bring a bag lunch regardless, just as her parents do.  If she has a birthday gift to buy, we take care of that, or any other special events.  She also earns extra money babysitting her brothers and saves her birthday money.  We also provide a metro card.   A lot of middle school socializing centers around eating, esp. with girls.  On Fridays, they all go to Starbucks or Shake Shack, or Five Guys. That's mostly where the money goes.   I imagine next year in high school, we will raise it a bit but I don't think kids need tons of cash.  That can lead to trouble."


  • "My daughter is 7 and has been getting an allowance for about a year. It's currently two dollars a week. She has a bank that has 3 compartments: spend, save, and "give away". She  gets to put a dollar in spend to use as she likes, and then has to put 50 cents in save, and 50 cents in "give away". When she gets a certain amount in "give away," she decides where to give it (lately it's been for dog rescue, because we volunteer for a local group).


  • "Unlike Tooth Fairy rates, which are regulated by a Byzantine system controlled by secretive guilds, allowance rates are really a matter of personal preference. For some it was as simple at $5 per week, minus deductions for heinous behavior. Others used formulae like $3 per year of age per month, or the one we went with in the end, $.50 per year-of-age per week. Interestingly no one suggested financial incentives for good behavior." (rates as of Jan 2011).



The Joys of Fiscal Responsibility -- or Not

"A few months down the road, I am happy to say that the allowance is working out pretty well. I was bowled over when number one son spontaneously used his allowance to buy a gift for his little brother and delighted when he decided not to blow his savings on DSi credits and invested in LEGO pirates instead, a purchase that has brought him many hours of joy. Kid brother wants to get in on the act too, though he doesn’t quite grasp that it will take him approximately 4 years to save enough to afford the vintage Batman LEGO set for which he lusts. The only bumps in the road have, surprisingly (or maybe not surprisingly at all) come on my end. I have neglected to give the allowance on a number of occasions, which would be fine if I were keeping better track. Right now we are in mortal danger of becoming the parental equivalents of Lehman Brothers. Surely there must be an app for this?