What Is Allowance? When to Start, How Much to Give, and How to Make It Work
Handing your kid a few dollars a week might seem like a small gesture. But it’s one of the most powerful financial lessons you can give.
An allowance isn’t just about money. It’s about teaching kids how to wait, plan, and make trade-offs. When they don’t have enough to buy something they want, they start to learn how to save. When they blow their budget on candy, they begin to understand regret and maybe even start asking how to earn more.
Allowance is a tool for kids, but it’s also a tool for parents. It can stop the endless cycle of impulse buys and “can I have that?” moments at the store. Instead of swiping your card every time your child sees something shiny, you can say, “That’s a great thing to save for.” It shifts the responsibility and gives them the space to start making their own decisions.
And for some kids, those early lessons stick. Personally, I loved saving my allowance. I’d hoard it and watch it grow. Whether it was allowance or something else, I’ve carried that habit of delayed gratification into adulthood.
The point is, you don’t need to make allowance complicated. But you should make it count.
What is an Allowance?
Allowance is a recurring amount of money you give your child, often weekly, that helps them learn how to manage their own spending. It acts like a small, personal budget. Once it’s gone, it’s gone.
The real value of allowance isn’t in the dollar amount. It’s in the habits it creates. Kids begin to understand they can’t buy everything they want right away. They learn to wait, to prioritize, and to think about how to earn more.
Most families take one of three approaches:
- No-strings allowance: A set amount is given each week regardless of chores. This version focuses on budgeting and financial habits.
- Chore-based allowance: Money is earned by completing specific tasks. If the chores don’t get done, the allowance doesn’t arrive.
- Hybrid model: Kids get a base allowance each week. They can earn more by helping out extra or lose a small amount for serious misbehavior.
In our home, the hybrid approach has worked well. Our kids receive their allowance every week no matter what. If they go above and beyond with chores, they can earn bonuses. If they’re acting up after a warning, we might take away a dollar. We never take back money that’s already been given, and we keep the system consistent.
We also use allowance to spark bigger conversations. Sometimes they want to save up for something expensive. Other times, we talk about investing through apps like Greenlight, which has helped open the door to teaching compound growth and long-term thinking.
You don’t need a perfect system. Just choose a style that fits your family and stick with it. The consistency is what turns allowance into a tool for lifelong money skills.
When Should You Start Giving an Allowance
There’s no perfect age to start giving an allowance, but most kids are ready somewhere between five and seven years old. Advanced five-year-olds may be ready earlier. By six or seven, many kids are asking for things at the store or showing curiosity about money. That’s your window.
A good sign a child is ready is if they start asking for new toys, candy, or souvenirs often. That’s a great time to introduce the idea of saving and waiting. If they’re starting to ask where money comes from or why things cost what they do, that’s another sign they’re ready to start learning.
You don’t need to start big. In our home, we’ve used a simple system: one dollar per week for every year of age. A six-year-old gets six dollars a week. As kids grow older, especially into their teen years, you might increase the amount, especially if they take on more responsibility around the house.
The age you start doesn’t matter as much as the habit you build. Some families begin early with just a few coins a week. Others wait until their kids are older. Either way, the goal is to teach consistent habits. Start when it feels right for your family, and then stick to it.
How Much Allowance Should You Give?
A simple starting point is the $1-per-year-of-age rule. That means a six-year-old gets six dollars per week, a ten-year-old gets ten, and so on. This gives kids enough to make small choices while keeping things manageable for parents.
As kids get older, especially once they hit twelve or thirteen, you may want to move to a flat weekly amount. Teenagers tend to have more social plans, more freedom, and more spending opportunities. For that group, many parents move to $20, $25, or even $30 per week, depending on what the money is expected to cover.
You can always offer extra opportunities to earn more. If your child is saving up for something big, like a video game or a new pair of shoes, that’s the perfect time to suggest extra chores. Washing the car, helping in the yard, or walking the dog for a week might earn a few extra dollars.
Weekly allowance tends to work best for most families. The short cycle gives kids a regular rhythm, lets them see progress quickly, and keeps the habit top of mind. Monthly works too, especially for older kids, but it may require more oversight and planning.
As for the form of payment, either cash or digital works. Younger kids often benefit from the tangibility of cash. They can hold it, count it, and watch it grow. Older kids might do better with apps like Greenlight or GoHenry, which let them track their spending and even invest in small amounts.
The allowance doesn’t have to be split up or restricted unless you want it to be. Some families like dividing it into “save,” “spend,” and “give” buckets. Others let kids manage it however they want. The key is that they’re making decisions. That’s where the learning happens.
Should Allowance Be Tied to Chores?
This is one of the most debated topics around allowance. Some families believe kids should only get money if they’ve worked for it. Others treat allowance as a learning tool, separate from chores. There’s no one right answer, but a hybrid model often works best.
In our home, we don’t tie the base allowance directly to chores. The reason is simple. If a child has a rough day or forgets a task, the whole week’s allowance shouldn’t be lost. That kind of system can backfire fast. A missed day turns into a missed week, and there’s no recovery. Instead, we set a baseline amount that comes in regularly. Then, we offer ways to earn more through effort and helpfulness.
That bonus structure helps teach a different kind of lesson. It shows that extra work leads to extra rewards. If your child really wants something, there’s a clear path to get there faster by contributing more. Just keep expectations age-appropriate. A six-year-old might not suddenly volunteer to wash the car, but an eight- or nine-year-old might.
We make a clear distinction between expected responsibilities and paid extras:
Expected: brushing teeth, cleaning their room, making the bed, helping with dishes, setting the table.
Extra opportunities: folding laundry, unloading the dishwasher, helping with yard work, or doing deeper cleaning jobs.
Sometimes, we’ll also deduct a small amount for repeated bad behavior, but only after a clear warning. Kids understand this system as long as you explain it clearly. Let them know what’s expected and give them a chance to ask for extra ways to help if they want to earn more.
In the end, allowance isn’t just about the money. It’s about building structure, creating motivation, and helping kids understand how effort connects to outcome.
What Can Kids Do With Their Allowance?
Once your child has money of their own, the real learning begins. They may spend it all right away, save for something big, give some away, or even try investing. These small decisions are what shape long-term money habits.
In our home, we talk about saving, giving, and investing. But in the end, the money belongs to the child. We let them spend it however they choose, offering advice along the way. Sometimes they follow that advice. Sometimes they don’t. And that’s okay.
It is important to be comfortable with your kids wasting money once in a while. That is how they learn. If they spend their allowance on candy and later realize they cannot afford a game or toy they really wanted, that becomes a valuable teaching moment. They begin to understand that money is limited and choices matter.
We have also had great conversations about investing. Explaining it as “owning a piece of a company” helps make the idea more tangible. One of our kids even gets more excited about buying stock than buying toys. That’s not always the case, but the fact that the option exists has opened the door to new thinking.
What we really want is for our kids to grow up with a healthy relationship to money. We want them to live within their means, avoid wasteful habits, and feel confident saving for big goals. That kind of thinking takes time, but it starts with small weekly choices made on their own terms.
Your Family, Your Rules… Just Start Somewhere
If you’re still on the fence about starting allowance, give it a test run. Try it for a couple of months. You might find a rhythm that fits your family right away, or you might learn that your child isn’t quite ready. Either way, you’ll gain insight into what to look for as they grow.
The most important thing to remember is that it’s their money. You can guide them, suggest ways to save or invest, and offer encouragement. But the real learning happens when they make their own choices. Let them hold the reins. They’ll stumble sometimes, but those small stumbles are what build long-term money smarts.
Allowance isn’t the end goal. It’s the beginning. It opens the door to conversations about budgeting, saving, earning, and giving. And over time, those conversations shape habits that can last a lifetime.
So start small. Stay consistent. And give your kids the chance to grow into their money.