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 MoneyProdigy.com 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.