The ability to manage money effectively is a critical life skill. It is important that parents instruct
children in money management skills in order for them to develop into successful and responsible
adults. An allowance provides children the opportunity to manage money, set spending priorities,
and budget for expensive items. Children also learn the rewards of responsible spending and the
consequences of irresponsible spending.
When should children begin to receive an allowance?
Children ages 6 to 7 are at an optimal age to begin receiving an allowance. At this age children
have developed a general understanding of the abstract value of money. For example, they
understand that a quarter is worth four quarters or ten dimes. Prerequisites to this stage include
basic counting skills, recognition of various coins and their values, and the knowledge that money
is used to buy needed items.
How much allowance is best?
A weekly amount equal to half the child’s age is an appropriate starting point for a younger child.
This figure can be adjusted depending on the tasks assigned or the amount of financial decisions
you wish to entrust to your child. As children demonstrate greater money management skills a
weekly allowance of one dollar per age may be more appropriate. Expenditures for younger
children might include toys or discretionary items, while children ages 15 to 16 may be able to
budget for larger monetary items such as clothes. It is often beneficial for children to allocate a
portion of their allowance for charity and long-term savings. The 2003 Yankelovich Youth
Monitor Survey reported the following average weekly allowance for children in the United
States: Children ages 6-8, $6.00; ages 9-11, $8.00; ages 12-14, $ 11.30; and ages 15-17, $ 19.30.
How often should an allowance be given?
A weekly schedule is usually optimal for younger children. This allows closer monitoring by
parents and less room for irresponsible spending. Older children ages 14 and older may benefit
from a two-week or monthly pay period to more closely resemble a typical adult pay schedule.
Should children earn their allowance?
It is often advisable to distribute an allowance that is not based on the completion of chores.
Chores are best divided into jobs that are expected to be completed because the child is a
contributing member of the family and jobs that the child can choose to complete in order to earn
money in addition to their weekly allowance.
Should an allowance be withheld as a punishment?
It is best not to withhold an allowance as a source of punishment. This issue usually arises due to
one of three situations.
Your arrangement states that allowance is earned by completing chores and your child
did not complete all of the work. Whether a fee is set for each chore or all chores need to
be completed before any payment is made, you run the risk that the child will decide that
they do not need all or some of his/her allowance that week and will therefore choose to
not complete his/her chores. This is a good reason for keeping the chores and allowance
Your child misbehaves (unrelated to chore completion or monetary damage) and you
withhold his/her allowance. Determining a logical consequence of the child’s behavior is
a more effective punishment. For example, if your child does not come home from a
friend’s house at an agreed upon time, he/she is not allowed to go to his/her friend’s
house for a week.
Your child owes you money because he/she either borrowed money or broke something
that needs to be replaced or repaired. In this situation it is best to pay your child his/her
allowance and then request that your child pay you the money owed. This is important for
two reasons. First, you are demonstrating that you are fiscally responsible and can be
trusted to maintain your end of the allowance arrangement. Second, your child is learning
to behave responsibly by paying his/her debts.
(Adapted from National Association of School Psychologists: Helping Children at Home and