How To Give Kids an Allowance the Right Way

There comes a point for nearly every parent when it's time to start providing your child with allowance. And while that may sound like a relatively straightforward task, it can be challenging to create a system that both you and your children agree upon, not to mention one that also imparts valuable financial (and life) lessons.  "Giving your child an allowance is one of the most basic, but often complicated, issues for parents. It's intended to help your child learn healthy behaviors around money at an early age, but for many, it can feel overwhelming," Ksenia Yudina, founder and CEO of the money app UNest, tells Parents. To help with this task, Yudina and other experts discuss the various approaches to providing an allowance and how to make the experience both educational and easy to manage.

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Chore-Based Allowance

child holding money

A chore-based allowance is exactly what it sounds like. You give your child a designated amount of money each month or week for completing certain tasks. "This could include things like doing the laundry, making their bed, or taking the dog out for a walk," says Yudina.

You could even take it a step further and incentivize your child to negotiate for more money by taking on additional responsibilities. This option gives them extra motivation to work harder to earn what they want.

"This will teach your child the value of hard work," adds Yudina.

When establishing a chore-based system, you'll want to carefully think through which tasks are appropriate for your child's age. A toddler obviously can't mow the lawn, but they certainly can wipe down a table, school social worker Nicole Nina, founder of the practice Mindful Mountains, tells Parents.

"It's helpful to give the child at least some chores they can do independently, even if they may not get it done to the standard you typically complete them, because it fosters autonomy and a sense of completion," says Nina.

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4 Ways to Handle Your Kids' Allowance

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Repeated allowance

boy putting money in piggy bank

The repeated allowance system offers an entirely different take on the best practices around providing children money. In this scenario, the child doesn't have to do anything to receive the allowance, says Yudina.

"They simply get a specified amount of money at the same time each month," she explains. "The idea is to make an allowance a positive thing, build trust, and maintain consistency." This method teaches children money management skills, she says and encourages smart financial habits.

"They learn how to budget, save, and goal set on a fixed income," says Yudina.

The repeated allowance approach that Yudina is referring to may have merit. Some studies have shown that providing a reward in exchange for completing a task or chore does little to create motivation over the long-term, particularly for children. "Rewards are no more helpful at enhancing achievement than they are at fostering good values," according to research. "At least two dozen studies have shown that people expecting to receive a reward for completing a task (or for doing it successfully) simply do not perform as well as those who expect nothing."

Similarly, the website Positive Parenting Solutions suggests that when parents pay children for completing chores, a system is created in which the child begins to think "what's in it for me," if I do this? Which is precisely the opposite of what you're trying to acheive.

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Amount of allowance

An image of a mother and her daughter counting coins from a piggy bank.
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This comes down to personal preference and affordability, says Yudina.

"An easy rule-of-thumb is an age-based approach, which means you provide the same amount per week based on their age (or half of their age)," Yudina explains. "For example, if your child is 10, you may want to offer them $10 a week. But again, you have to do what makes the most sense for your family. You may decide to choose a different number for your kids."

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When to start giving allowance

child with lots of toys
Heather Weston

Studies have shown that children begin to grasp money concepts by age three and that many of their money habits are set by age seven.

"That's why we recommend that you begin teaching your kids about money as early as possible," says Yudina. "Pay attention to when they start asking questions about money and match the amount and lessons with their age and maturity level. Generally, around six is a great age to get started."

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Consistency is key

Mother and Daughter Putting Money In Piggy Bank

Once you have a system in place, parents need to stick to it.

"Parents often find themselves juggling a lot, adding in the allowance system is yet another thing they now have to keep track of. However, it is imperative that parents follow through with whatever system they create, or it shows the child the tasks they were asked to do are not important," says Nina.

You might even consider creating a chart or another visual that helps keep the entire family accountable for what is being asked of the child.

Finally, it's important that parents provide redirection and reminders if children do not self-start with tasks, adds Nina.

"Take into consideration how much time and commitment this may take from your family prior to starting a system so that you chose one that will last."

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Consider the bigger lessons

boy missing two front teeth smiling holding five dollar bill
Jose Luis Pelaez Inc. / Getty Images

As you embark upon creating an allowance system take the time to think about overall goals and what you're trying to accomplish. In other words, what are the bigger lessons you're trying to teach your child? You'll also want to be prepared to frame the conversation with your kids in a way that best underscores your goals and objectives.

"You likely aren't coming up with an allowance system because you are worried about your child's finances—you're doing it because you want to teach them the value of money, have them consider what daily tasks happen in the home, and think beyond themselves," says Nina.

Some phrasing options, courtesy of Nina, might include:

  • We are a family, and we work as a team. We want you to complete chores because you are a member of the team.
  • It's nice to have money to buy something when you see something you want at the store, and this is an opportunity for you to make money to buy things you want.
  • When you grow up you will need to do lots of things to keep you're home running, this is an opportunity for you to see all the things you need to do as an adult.

Ultimately, you'll know best how to word things and express them with your unique child. But eliciting buy-in can be very helpful in order to acheive the goals of the allowance system.

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