Experts answer all the common questions parents have about giving an allowance, including when to start and how much to give.
When do you start giving your child an allowance?
Wait until you feel your child is mature enough to grasp the concepts of saving and spending, most likely around age 4.
How much do you give?
Some experts recommend giving $1 monthly for every year old (e.g., $5 a month for a 5-year-old), but only if it makes financial sense for your family. Otherwise, decide on your annual allowance budget per child, then figure out the frequency. Consistency is key.
How should you give the allowance?
Ron Lieber, author of The Opposite of Spoiled, popularized the three-jar approach, in which kids split up allowance into pools: one for spending, one for saving, one for giving. It’s a good starter path for younger children. But older kids have cash flow issues just like grown-ups, says Joline Godfrey, author of Raising Financially Fit Kids—maybe one month they have multiple friends’ birthdays. Consider giving a lump sum for, say, six months to cover expenses you’ve decided are their responsibility. Encourage them to budget it with saving and giving in mind too.
Should you link allowance with chores?
In a word, no. Most experts agree that tasks like making the bed and clearing the table should be expected, not rewarded. Kids might earn money for “bonus chores” that go above and beyond the norm, like babysitting or helping with a big yard project.
What about with grades?
Nope. “An allowance is a tool for practicing financial skills—not a salary,” says Godfrey.