January 14, 2010

The 4 Ways to Pay Kids an Allowance

T Rowe Price

Most money experts agree that paying kids an allowance is a good idea. It can teach children the value of a dollar, it can instill your own financial values if you start at the right age, and it is a great way to incorporate math into everyday life (how many times have your kids gotten out the coins just to sort and count?)

We asked our Cozi Facebook fans if they pay their kids an allowance. It's clear that there are many philosophies to handing over money to kids. What's interesting is that regardless of what method parents use, they believe their approach will help kids learn the value of money.

Kids Allowance
The No-Allowance Approach
These parents believe that being a kid is a volunteer position. There is no weekly allowance, but still a sense of duty and working hard to get what you want.

  • "My girls do not get an allowance. They are required to do chores, since they are part of the family. If they go above the call of duty, such as helping get ready for a special dinner, they will get compensated." --Lisa M. D.
  • "No allowance here yet. I think keeping things picked up (room and toys through out the house) is a part of being responsible. However, perhaps we should start something monetary for additional duties." --Nicole S.

Strings Attached
Money is handed over every week, but there is a method to the spending that usually involves saving a portion of the allowance, donating to charity, or paying for a big-ticket item first.

  • "$5 a week. (They are 9 & 11) They can spend it however they like but we encourage them to give 10% to charity which so far they've been more than happy to do." --Kyla B. A.
  • "Yes they get 50 cents per year [of age.] It gives them a little spending cash after they place 10% in their savings account. As a family we decide at the beginning of the year what charity we are helping during the holiday season. This might mean a can drive, delivering meals or a monetarial donation." --Patricia K. H.
  • "We give our kids one dollar for each year of age. However, they are expected to save at least half of that money. We also encourage them to give to charity two to three times a year." --Amy E.
  • "Yes, and with that they have to pay for their cellphones monthly. Anything they have left then it is theirs." --Gloribell T.

Working for a Living
While some may argue that chores and allowance should stay separate, there may be no better incentive for keeping the room clean than some cold, hard cash.

  • "My children get an allowance based on the chores the do each week, if they do not finish them the amount is reduced. I allow them to use it on whatever they want and they manage to do well with it. They know how to save it for something larger they want and usually end up buying something that all of them can use together." --Ruth W. J.
  • "Yes. My four year old gets five cents per chore. Each week we divide it equally into 3 jars-spending, saving, and charity. She can spend the spending money on anything she wants (within reason), saving money goes into her bank account, and charity goes to the agency of her choice." --Barrett G. H.

Free Money
The more independent teenager, who does not yet have a paying job, may have a more open-ended arrangement where chores and school are expected, but not formally tied to the allowance.

  • "My teenager gets 10 dollars a week to spend as he sees fit if he does his school and chores. He can save it for a large item if he chooses or what ever." --Chrysta H.

Share your own approach to allowances at home. How has an allowance helped your kids learn about money?

Get your family organized and on the same page with Cozi, the free online family organizer.



We give each of our 3 kids - ages 8, 12 & 17 - $2 a week. They each have chores they are responsible for and each can make extra money with extra chores. They have a bank that has 3 sections in it: a store (for spending on more expensive items), a bank (for long-term saving)and a church (for tithing 10%). Plus, each of them has an automatic counting bank which they use for smaller items they want now. Even though we recommend 10% for our church and at least that for the bank, they usually put in more.

Pat Yoe

We include a prepaid phone as part of our twin daughters' allowances. Straight Talk from Walmart. It's $30 a month for 1000 minutes and 1000 texts on the Verizon network.

We can always reach them and text when necessary and it's a great way to keep costs down too!


Allowances have helped us learn what is important to each teenager. We now know one is a saver and one is a spender. We give allowances at a weekly rate of $1 x age, no strings attached. Allowance doesn't work as a tool for behavior or academic performance. It is a gift of medium value to encourage their personal choice.


Hi. I just launched a company whereby you can track your kids allowance. We are just getting started. I would love to hear some feedback if you have the time to check it out. http://www.allowancemanager.com

Bill Dwight

You can also do a combination of the above: some baseline of expected chores, an allowance with splits & budgets, special jobs that pay more, and a "base salary". I'd add another tool: the "claw back". When our kids don't do the "expected chores" in the first approach, we ding them with $ penalties. Also useful to make loans in some cases for big ticket items.

Like John, we also launched a site that can help you simplify all this and be more effective: see FamZoo.com.

And, in the spirit of being balanced, there are others like ThreeJars.com. Try them out and compare.


I have too many kids to give them an allowance. I do not get extra money how can I afford to give them any?
My kids are expected to pick up and to do chores. If their chores are not done, they do not eat until they are completed. Hunger is a great motivator.
When my kids are old enough to get a job 16. They pay for anything they want, because they can get a job (even if it is raking leaves, shoveling snow etc.)
If they are not working age and need something I pay, but I also choose.
Teenagers find a way to make the money to afford what they think they need.
They also pay for their own cell phones and car insurance. Now days everyone else has a cell phone, so why should I pay for one. The car insurance as an added incentive for them to drive well. Getting their driving license also requires they obtain their Eagle Scout or Gold Award first! This results in kids planning and achieving a goal and adds to their future endeavors, be it a job, career, college or more importantly scholarships.
Yes, I have a 17.5 y/o son who made it to Eagle project and quit. He does not have a license, cell phone etc. complains about having to get a job and pay for it all, when other parents pay for their kids. I told him to see if their parents would pay for him too?:) I am also tired of hearing him complain, so now he is not allowed to add onto my phone plan or insurance policy, he has to take out his OWN plans at a much more costly rate. He stopped complaining about anything. I even took away his internet, that I pay for and told him he could pay me for the use of it. (He worked once, and bought a computer). There is always his two feet, a bike and a library. I think he is finally beginning to understand how fortunate he is. Which is difficult in a materialistic world where parents think that they need to get their kids everything. This sounds tough, but I will not enable my kids to grow up and expect everyone else (via Government taxes/weath redistribution) to pay for them.

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