Money Talks, So Should You

Q&A: How do I determine how much allowance to give my kids?

Erin Baehr
by Erin Baehr, NAPFA (@erinbaehr)

When it comes to allowances for kids, there are two main schools of thought: some say an allowance should be a reward for chores done around the house and the amount should be based on performance; others say doing chores is part of being in a family and an allowance should be given regardless. I prefer a hybrid approach. 

When my kids were small, we had the typical family job chart hanging on our fridge. The idea, of course, was that chores and other behaviors were to be tracked and marked with a star when completed. At the end of the week, performance was evaluated and rewarded accordingly.

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Well, if I had a job chart to track how well I tracked the job chart, I’d have gotten a big fat zero. While I think the job chart can be a great idea, to me it was one more thing to keep track of, and I didn't do it very well. It just wasn’t right for me.

Later on, as the kids got older and developed a social life, I realized that every weekend I was hit up for seemingly random amounts of cash for things like going to the movies or birthday parties. Being a planner by nature, these unexpected trips to the ATM bugged me. That’s when the genius of an allowance struck me.

A single mom at the time, I wasn’t giving my kids an allowance because there just wasn’t a lot of extra cash and I didn’t think I could afford it. But by converting those last minute pleas for cash into a regular amount, it actually helped my budget  and helped the kids learn to budget as well.

I determined the allowance amount by starting with how much I was averaging in outlays each week already for my oldest (and therefore most social) child, and came up with a formula based on age. I took a base amount, and for each child added one dollar per year of age.

For instance, you could use $5 as the base, and give your 15-year-old $20 per week and your 12-year-old $17 per week. The important thing is to base it on the reality of what you would be spending anyway.

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Giving a set amount to your child each week empowers him to make choices about whether that stop at McDonald’s is worth it, or perhaps saving up for a new video game would be the better use of cash, without too much advising or nagging on your part. He also has the opportunity to make poor spending decisions and learn from his mistakes while the price of tuition is low.

You can also offer bonuses in exchange for extra help around the house. I do agree with those who say chores should be expected of your child just because he is part of the family unit, without being paid.

However, I also see the value in giving a bonus for additional chores that go above and beyond. That can be another win-win. Consider a standing offer to any child who wants to do certain jobs to earn extra cash, like bagging up clothes to donate or cleaning out the garage  things that you would have to do otherwise, so their help frees up your time and gives them more pocket change.


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Erin Baehr, CFP, is the owner of Baehr Family Financial, LLC. Baehr is a member of the National Association of Personal Finance Advisors (NAPFA), a fee-only professional association and a Dimespring knowledge partner.