Allowance: What Works, What Doesn’t, and Why It Matters
Allowance is a hot topic among parents. When to begin? Should it be earned? And how much is too much? If you’ve ever second-guessed your approach to allowance, you’re not alone.
The truth is, allowance for teens is a powerful financial teaching tool. When structured the right way, it helps teens develop smart money habits, budgeting skills, and financial confidence that will follow them into adulthood. In fact, a study done by SNB shared that nearly 8 out of 10 parents give their kids an allowance in the U.S.
But here’s the catch: how you handle allowance matters just as much as whether you give one at all. Let’s break down three key strategies for making allowance work for your family.
1. Treat Allowance Like a Paycheck (Because That’s How Life Works)
One of the most valuable lessons kids can learn from an allowance is that money comes at regular intervals...just like a paycheck. That means consistency is key!
When allowance is given predictably, kids learn to budget, plan ahead, and manage their spending between paydays. On the flip side, if they receive money sporadically, sometimes on Fridays, sometimes skipped, sometimes doubled, it can create financial anxiety and bad habits.
Pro tip: Set a specific “payday” each week and stick to it. Whether it’s every Friday or the 1st of the month, keeping it reliable helps kids learn to manage their money with confidence.
2. Don’t Tie Allowance to Chores (Yes, Really!)
A lot of parents assume that kids should “earn” their allowance by doing chores. It makes sense at first glance, after all, adults work for their money, right? But here’s why that approach can backfire.
Chores should be part of being a contributing member of the family, not a paid gig. If kids start expecting payment for household responsibilities, they may decide it’s not worth it to take out the trash if they don’t need the money that week. Worse, it teaches them that chores are optional when in reality, they’re just part of life.
That doesn’t mean kids shouldn’t work for extra money. If they want to earn beyond their allowance, create opportunities for additional tasks. This could be things like washing the car or organizing the garage. This teaches initiative and work ethic without making basic responsibilities negotiable.
Pro tip: Instead of saying, “I’ll pay you $5 to unload the dishwasher,” try saying, “We all pitch in because we’re a family.” Then offer separate earning opportunities for kids who want to go above and beyond.
3. Give Allowance a Purpose (Not Just Spending Money!)
Here’s where allowance becomes a real game-changer. Instead of just handing over cash and letting kids blow it on snacks and video games, use it to teach intentional money management.
A great way to do this is by using the Spend-Save-Give system:
Spend: A portion goes toward fun and personal wants.
Save: Teach kids to set aside money for bigger purchases or long-term goals.
Give: Encourage generosity by having them donate a percentage to a cause they care about.
Some parents even add a fourth category for unexpected expenses, like when they forget their school lunch or need to chip in for a friend’s birthday gift. The key is giving kids responsibility over their own money so they learn to make wise choices while mistakes are still small.
Pro tip: Let kids experience running out of money occasionally. It’s better for them to feel the disappointment of not affording something now than to struggle with money mismanagement as an adult.
How Much Allowance Should You Give?
This is one of the biggest questions parents ask, and there’s no one-size-fits-all answer. A simple starting point is $1 per year of age per week (so a 10-year-old gets $10 weekly). According to data from Greenlight, the average weekly allowance varies by age. For instance, 6-year-olds receive approximately $6.69 per week, while 15-year-olds receive about $14.89 weekly. But ultimately, the amount depends on:
Your family’s financial situation
What the allowance is expected to cover (just fun money, or also gifts, outings, etc.?)
Your child’s ability to manage money responsibly
Pro tip: If your child constantly spends their allowance too fast, don’t automatically increase it. Instead, help them create a budget that stretches their money further.
Making Allowance for Teens a Lifelong Lesson
Allowance is all about teaching teens how to manage it. With a structured approach, they can learn the essentials of budgeting, saving, and giving, long before they have to handle a real paycheck.
By keeping allowance consistent, separate from chores, and purposeful, you’re setting your teen up with money skills they’ll use for life. And trust me...when they grow up knowing how to budget, save for goals, and make smart financial choices, you’ll be glad you started early.
If you're looking for more ways to teach teens financial confidence Beyond Personal Finance is a great place to start, because smart money habits start young!
