understanding kids' allowances

Learn how to manage allowances better using helpful advice from family financial expert Neale Godfrey, the founder of the Children's Financial Network.

For many adults, the memory of our first allowance is a fond recollection--a time when we first began to enjoy the independence and the responsibility that having our own money brings. Now that we're the parents, we want to make sure our children's earliest exposure to money is equally positive. But where to begin? When should kids get an allowance? How much? And should it be attached to chores?

NickJr.com looked to family financial expert Neale Godfrey, the founder of the Children's Financial Network and New York Times best-selling author of Money Doesn't Grow on Trees: A Parent's Guide to Raising Financially Responsible Children for answers.

The Natural Consequences of Money

Giving a child an allowance is an opportunity for parents to teach the "natural consequences" of money: The only way to get money is to earn it. And it can start as soon as your kids begin saying, "I want, I want," which is around three years old. Allowances should be attached to chores, but--just as not everything adults do is rewarded with money--there should also be family chores that are not monetized. In short, when planning to give children an allowance, start by teaching kids that there are two types of chores: Work-for-Pay chores and Good Citizen chores.

Work-for-Pay Chores

Work-for-pay chores are simple tasks that allow kids to earn allowance money while also gaining important life skills. Following are some age-appropriate chores for kids from ages 3 and up. You should model the behavior and do the chores with your young ones, then, as they get older, the chores can become more challenging and kids can be expected to do more on their own.
Ages 3-4
  • Help put napkins on the table
  • Clear napkins off the table
  • Throw napkins away after meals
  • Help sort whites and color clothing for washing
  • Dust TV screens
  • Fill pet bowls with water
  • Put newspapers and magazines in piles to recycle
Ages 5-7
  • Dust a room
  • Brush pets
  • Sweep outside walkways
  • Match socks
  • Fold clean laundry
  • Bring folded laundry to appropriate room
  • Fill and empty dishwasher
  • Sort scraps into compost bins
  • Vacuum small room
  • Bundle and tie paper for recycling
Ages 8-10
  • Set tables for meals
  • Feed pets
  • Vacuum a large room or area
  • Do laundry (Tip: Have kids start with their laundry, not yours)
  • Weed gardens
  • Water outside plants
  • Help wash cars with an adult
  • Rake leaves
  • Take out garbage
  • Set up a compost bin or compost heap and manage it
  • Check expiration dates in refrigerator and purge any outdated food

How Much to Pay?

The amount of your child's allowance is, of course, entirely up to you as a parent, but you'll want your kids to have enough to be able to create a budget--another important money skill. So, if you can afford it, pay your child their "age" per week. For example, a 3-year old gets $3.00 a week and a 10-year old gets $10.00 a week.

Make a chart of work-for-pay chores and put it on the refrigerator. Have them perform approximately three to four work-for-pay chores about four times per week, for only 15 minutes per session. As your kids complete each chore, they can check it off and you can check to see if it has, in fact, been completed. Put a gold star or a sticker next to the completed chore and celebrate a job well done. Make payday one day at the end of the week--just like you are paid--and remember, just like in real life: "No work means no pay!"

Increase chores as kids get older, balancing chores with their school and after-school activities. With more responsibility comes more pay, so, as they get older, you will add more money but also more chores.

Good Citizen Chores

Kids can and should also perform household chores without expecting monetary compensation. These types of chores help kids learn good personal habits, teach kids to be good household citizens, and help kids appreciate how everyone in the house chips in to help each other. These chores include: brushing their teeth, hanging up clothes or wet towels, cleaning up toys, going to bed and getting up on time, and making their beds in the morning. As with the work-for-pay chores, start modeling this behavior first, even with your 2- to 4-year olds. You'll see when they can start doing these tasks without your help. You might still have to remind and "nudge" your older ones from time to time, but these tasks will become lifelong habits.
NickJr.com's family financial expert, Neale Godfrey, is the founder of the Children's Financial Network, an organization dedicated to worldwide financial literacy through the education of our youth and their parents about money. She is the author of 16 books dealing with money, life skills, and values.
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