How To Create An Allowance System That Actually Works

Wondering how much allowance to give your child? Let me give you some thoughts on the topic, plus how best to create an entire allowance system (what I call your Kid Money System).

Instead of worrying about how much allowance to give your child (how much allowance for a 12 year old? how much allowance for a 10 year old? $8 per week? $5 per week?), I’m going to open up your thinking a bit here.

Because worrying about how much allowance to give is just one tiny piece to the whole money pie of what I call your Kid Money System.

I’m Amanda L. Grossman from where I’m partnering with Mama Bears like YOU to teach your kids money through educational adventures like the Mt. Everest Money Simulation.

And today we’re going to talk about the 4 key elements you need to run your Kid Money System – whether you decide to give an allowance, pay for chores, or whatever else that works for your household.

Decision #1: Decide on What Money is Given for in Your Household

How is money “earned” or what is money given for in your household? This is your first major decision in setting up your Kid Money System.

Your options are:

  • The Dole Method: This is spending on-demand when your kiddo needs or wants something.
  • Learning-Based Earnings: Money is awarded based on child’s learning performance or efforts.
  • Allowances: A consistent amount of money is given every X amount of days.
  • Chore-Based Commissions: Money is earned from your kiddo completing chores/tasks.
  • Employee/Consultant-Based Earnings: Money is earned based on kid-initiated projects + ideas/employment.

Decision #2: Decide on How Often You Want to Pay

Next, you’ll want to figure out how often you’ll be putting money into your child’s hands. Common durations here are weekly, bi-weekly, or monthly.

Also think about what day of the week will you pay your child?

Tip: If your child is younger, you generally want to give money to them more often because they have less impulse-control than if they’re older and you’re trying to get them to more thoughtfully spend the money they’re given.

Decision #3: Decide on What Method of Payment You’ll Be Making

How will you be paying your child? You could use cash, gift cards, a check they deposit into their account, direct deposit into their account, allowance apps, etc.

Decision #4: Decide on How Much Allowance to Give

Here’s where things get juicy and our heads start to explode with all the options, right?

How much allowance are we supposed to give to our children?

Well, that depends on a number of things. So, while you’re sifting through all the articles on the exact amount of money to give to your child, let me help guide your decision.

  • What are their Money Responsibilities?: You can’t very well decide on a number – or look at someone else’s Kid Money System and see how much they’re paying THEIR child – especially without knowing the money responsibilities that you’re going to give your child. How are you expecting them to use this money? Do they have to cover any needs or wants from it? If so, how much would YOU need to cover those amounts? (psst: this is also how you can justify giving more money to an older child than to their younger sibling. Explain to the younger sibling, who might find the whole thing unfair, that they have less money responsibilities that they have to pay for. Their older sister may be getting more money, but they also now must buy their own X).
  • What’s their Age?: You don’t want to give gobs of money to a little guy if they’re just starting out, and you don’t want to give wee amounts of money to an older kid who is nearing the employment age and will be thinking they’ve hit the lottery (and can thus spend their paycheck that way) at their first job. Age matters.
  • What Do THEY Think they Should Get?: I am in no way saying you should go off of this number, but asking them can give you some money context from your kiddo’s world. You might find out that they think $5 is a whole lotta money, or that their friend gets $20/week, or that they think $5 is for babies. Context is golden!

Remember that each of these elements is part of your Kid Money System design, meaning that what you decide should be in line with the money goals you have for your child to meet.

For example, if you want your child to start saving money, then make sure you don’t give them enough money each payday for them to pay for everything they want. OR, you do something like hand over a new money responsibility for them to pay for, such as when they go to the movies on the weekend, but not give them enough to cover the cost within one week.

For much more information + ideas on how to set up your Kid Money System by design so that your child starts to self-discover the money goals you have for them, be sure to sign up for my free 48-hour Kid Money System Challenge below.

Have you decided to give your kids an allowance but aren't sure how much allowance to give? I'll help walk you through a few and figure out one that will work for you. #kidallowancechart #kidallowanceideas #kidallowance #kidallowancesystem #chorecards

Should Kids Get Allowance? 3 Mistakes Parents Make.

Should kids get allowance? How about an allowance for chores ? Well, that depends on what the allowance looks like (aka, your Kid Money System). Let’s talk about 3 mistakes to avoid when setting one up.

Should kids get allowance? How about allowance for teenager?

Well, if done right, an allowance can be like a set of training wheels. Money ones, that is.

It can prep your kiddo for what to do with the consistent income they will (hopefully) earn one day.

But if done incorrectly? Well, it could instill some not-so-desirable money behaviors in your child that could hurt their future bank accounts one day.

I’m Amanda L. Grossman from where I’m partnering with Mama Bears like YOU to teach your kids money through educational adventures like the Mt. Everest Money Simulation.

I’m going to outline for you 3 mistakes well-intending parents make when they give an allowance.

Pssst: Want to avoid these by setting up your Kid Money System the right way from the start (or tweak the one you’ve got that’s hanging by a thread)? Join my 48-Hour Kid Money System Challenge.

Allowance Mistake #1: Inconsistency

There are various ways your Kid Money System (allowance/chores/commissions – whatever you call it) could be inconsistent.


:: You forget to pay your child an allowance sometimes.

:: You pay them at different intervals (so sometimes once a week, and other times, once every two weeks).

:: You pay for chores, but the expectations you have for whether the chores were completed well enough for payment change depending on, well, whatever (the weather, your mood, your patience level that day – boy can my little guy test mine!).

:: Sometimes bailing your kid out when they need a “loan” from their next allowance period.

:: etc.

The reason why it’s super important to be consistent with whatever type of Kid Money System you are giving to your child – whether it be through an allowance, through chore commissions, through employment, etc. – is because that enables your child to:

  1. Plan Spending and Savings: If your child knows when money is coming, and how much is coming, then they have the precursor to being able to set savings goals for themselves and actually reach them.
  2. Feel Consequences: If you are consistent with when you give your allowance, and don’t give them an allowance earlier than actual payday just because they overspent, then you set up a system where they start to feel the consequences (both good and bad) of their decisions.
  3. And It Helps YOU Clearly See if It’s Working (or Not): There’s no “right” or “wrong” way to give an allowance. We talk about this much more in my free training (the 48-hour Kid Money System Challenge). But in a nutshell, it’s more about working towards the money end goal of parenting your child – that when they’re out of your house as an adult, they’re in total control of both earning and spending their money. In order to do that, you’ve got to know if the current system you’re using is working, which means you need to be consistent with it. Is the problem in the system itself, or in the execution?

Allowance Mistake #2: Thinking an Allowance Itself is a Money Lesson.

Did you know that the research indicates kids don’t become more financially savvy with an allowance alone (compared with other kids who were never given an allowance at all)?

It’s shocking…but true.

Where your child will actually get ahead in the money savviness department is following up their Kid Money System/allowance with conversations + lessons around money management.

Professor Lewis Mandell, who headed up the study of looking at the last 50 years’ worth of allowance research, concluded that “in today’s busy world parents too often simply pay their kids an allowance with no discussion of what it is for or how to manage the funds.”

You’ve got to include money conversations and recap sessions where you go over what your child learned from their latest money blunders in order to pass on those money lessons to your child.

Allowance Mistake #3: Not Handing Over Money Responsibilities

With money comes responsibilities.

Sure, there are a heck of a lot less when you’re a kid (ahhh those were the days – when $5 a week, the allowance amount I got, meant I could fill my candy quota).

So, if you never hand over spending responsibilities with the actual money…then you’re missing out on some key lessons in life.

And don’t forget that once you give them a money responsibility to take care of, you also will probably have to fork over more money. I mean you can’t expect them to take over the spending of their weekend activities on $5/week (unless you want them to lose motivation, that is!).

Want to learn much more about the best ways to set up your own Kid Money System (KMS)? Then be sure to sign up for my 48-Hour Kid Money System Challenge. You’ll receive a KMS Scoresheet to your inbox so that you can start to see where your own system stands, and where it could use some help.

Still trying to debate whether or not should kids get an allowance? Let's figure out if it's right for you after reading a few of the most common mistakes parents can make. #kidallowancechart #kidallowanceideas #kidallowance #kidallowancesystem #chorecards

What Are Allowances? They’re Not A Money Lesson.

What are allowances for kids? I can quickly tell you what they’re not – they’re not a money lesson for your child. At least not without this.

You read that right, Mama Bear.

Just giving children an allowance alone − whether from earning it through chores, projects, or handing it over − is not a money lesson that will make your child financially savvier than kids who never received an allowance at all.

And I'm not just saying that to grab your attention by scratching cross-grain.

There's real research to back it up.

Kids' Allowance is Not Enough to Teach Money Management

The study where this information originally came from was by Professor Lewis Mandell, who looked through all of the allowance studies from the last 50 years and found a really crazy outcome: kids who received an allowance were actually LESS financially savvy than kids who did not.

EXCEPT − and this is a B.I.G. exception − when parents gave a child allowance + talked with their kids about managing their new money.

Now THOSE were the kids who moved ahead in money-savviness.

Kinda shocking research, right?

I mean, before pouring through a Library of Congress-sized room of research for the Money Prodigy Online Summer Camp I hosted two summers ago, I would've thought that kids who received an allowance would be about three rungs up on the ladder in Joan Miro's famous Dog Barking at the Moon painting from kids who never got to touch the green stuff.

And in case you’re questioning the information, know that T. Rowe Price found something similarly convincing about the importance of money conversations on top of allowances in their 2014 Kids & Money Survey. According to their results, Teachable Money Moments are über important (the kind that get sparked by my free, fun Money Conversation Starters for kids.

You Need More than an Allowance – You Need a Kid Money System

The research is in. We both know an allowance alone is not going to cut it.

And I want you to knock teaching your child about money out of Minute Maid Park (any Houstonians here?)!

To do that, you need an entire system that ties your money goals for your child into its very design so that they can self-discover critical money lessons. It’s like creating your own money incubator!

Soooo…ready to not only get your allowance system together (I call it your Kid Money System), but to actually tie it around the money goals that you have for your child so that it naturally teaches them money management?

I’ve created a 48-Hour Kid Money System Challenge just for YOU, and it’s free! Click the button below to sign up + get your Kid Money System Scoresheet to discover some of the strengths and weaknesses of your current system so that you can tweak them.

What are allowances anyways? Are you using your kid's allowance as a money lesson? This may not be such a good idea Mama Bears and I'll tell you why. #kid #allowancechart #kidallowanceideas #kidallowance #kidallowancesystem #chorecards

5 Things You Don’t Know About Giving Your Kid An Allowance

Allowance for kids – whether that’s money given to your child outright, earned through chores, etc. – is a great opportunity for your child to start learning lots of different money lessons. Let's discuss kid's allowances – what you don't know.

Allowance for kids is a hotly debated topic among parents.

Should I just give my child an allowance, and how much, exactly? Should allowance be tied to chores, and WHICH chores…because I don’t get paid to do the dishes every day?

Let’s set aside which system is the “right” one (whatever that means), and instead focus on 5 things you didn’t know that could really make a difference in how you’re doing your OWN system.

Allowance Surprise #1: There is no one “right” allowance system or model.

I’m going to just put this out there, right off the bat. Because let’s be real – despite what the gurus think is the ONE answer for every single child, and despite how many articles on allowance jars you see out there, you and I both know that children are different.

What may work for one child, or a group of children, will not work for others. And after researching the allowance landscape for a few months, I can honestly say there are convincing arguments for each side of the allowance vs. chore commissions divide.

So, we all need to stop swinging mud at one another and start looking at the tweaks that can be made to any Kid Money System (what I call the system for how money gets into your child’s hand – it’s a bit more than that, but we’ll leave it there for now) to make it tailor-made for your family.

Ready to see how your OWN allowance system/Kid Money System is working? Click below for a free score sheet.

Allowance Surprise #2: Giving Children an Allowance is NOT a Money Lesson

Sounds crazy, right? I mean of course it seems that if your kid gets some money into their hands and gets to make a few decisions with it, that they’re bound to learn money lessons.

But according to the research done by one man, who looked at over 50 allowance studies over the years, the money lessons don’t occur JUST from handing your child over money.

Pssst: by the way, that is the case for both if your child has to earn the money through some sort of chore system, or if they are given the money through an allowance system.

Nope. They occur in the follow-up (i.e., in the money conversations + expectations that you attach with the money you’re giving your child).

Allowance Surprise #3: If you want your kid to get a similar allowance to your childhood amount, then you need to adjust for inflation.

Do you fondly think back on the allowance you used to get/earn in your own childhood? You might also get to thinking, “my kid should get the same amount I did.”

That’s all grand and good. BUT, you need to remember a little money concept called inflation.

In other words, the $5/week that I used to get when I was 9 years old? It couldn’t buy today what it used to buy back then because products and services naturally increase their prices over time.

There’s a simple tool here you can use to plug in your old allowance figures and see what it would be in today’s dollars.

For example, my $5 allowance I used to get back in 1992 would be about $9 in today’s money.

Pssst: try not to do TOO much emotional adjustment with this one, as the numbers don’t lie.

Allowance Surprise #4: You might want to start earlier than you thought.

There’s actual research that shows kids are capable of learning how to save money around the age of 5 or 6.

But guess what? If they don’t actually get a consistent amount of money at that age via your Kid Money System…then you’re missing out on a critical money stage.

Pssst: is your child over 5 or 6 years of age and you’re now wondering if you missed out? I’m not into scaremongering; you can definitely still teach your child what you’d like them to know, starting from any age. In fact, statistics show that the majority of parents who give an allowance start at around the age of 8.

Allowance Surprise #5: You should keep your eyes on your own paper.

Many parents look to other parents to see how much they’re paying their kids. But here’s the thing: the amount you pay your child has several variables involved to figure out, one of them being what money responsibilities you are now passing onto your child to pay for.

10-year-old Liam’s parents might be giving him $20/week in allowance but expect him to pay his lunch bill out of this amount. And if you give your child $20/week from overhearing this from his mother, but haven’t passed on the same money responsibility to your own child, then your child would be getting a lot more than Liam to burn through.

It’s best to get a range idea of what others are receiving, then ultimately come to your own conclusion once you figure out the money responsibilities your own child will have to meet with the money.

I’m hosting a 48-hour Kid Money System Makeover Challenge (free), where we’ll get down to the details of setting up your own, tailor-made, allowance system capable of being tweaked over the years as your child ages and their needs change. How about you join us? Click below to sign-up + get your free score sheet to see where your own Kid Money System currently stands.

Think an allowance for kids is easy? Here's 5 things you should know before you do! #allowance #for kids #allowancesystemsforkids #charts #money