How to Give Your Child an Allowance – Create an Allowance System that Works

Wondering how to give your child an allowance? Let me show you the four decisions to make to set up your allowance system. 

You're past the debate of whether or not you should give your child an allowance, and you're now ready to start doing it. But exactly how to give your child an allowance?

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Instead of only worrying about how much allowance to give your child — something you'll need to figure out, for sure — 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 like to call your Kid Money System.

Kid Money System​ = your system-by-design that gets money into your kid’s hands so that they can self-discover the money goals + lessons you want to teach them.

But don't worry about all that. I'm going to walk you through not only what 4 key decisions you need to make in order to set up your system – whether you decide to give an allowance, pay for chores, or whatever else that works for your household – but I've got a really useful, free, one-page allowance plan for you to use.

Decision #1: Decide on the Foundation to Your Allowance

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

Hint: Each has it's pros and cons, and there's not one that is “right” for everyone.

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 payday durations 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
  • prepaid gift cards
  • check they deposit into their account
  • direct deposit into their account
  • allowance/chore apps

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?

Just 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 allowance 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 Allowance 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 keep the amount you're giving them right now, but you hand over a new money responsibility for them to pay for (like paying to go to the movies with their friends on the weekend).

For much more information + ideas on how to give your child an allowance, make sure you check out my hub on allowance for kids.

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