Parents: Does your teen need an allowance?

Father paying teenage son an allowance standing outside, next to a lawnmower

If you’re thinking about giving your student an allowance, there are several factors to consider. When should you start giving an allowance? Should you pay for doing chores? How do you decide what counts as a chore and what constitutes a contribution as a member of the household? And how much should you pay?

Here are some tips to help guide you in making the best decisions for your family.

What’s the right age to receive an allowance?

There’s no right answer for when a student can begin receiving an allowance. “You can start an allowance with a kid as young as third or fourth grade,” according to Andrew Smiler, a psychotherapist and author based in Winston-Salem, North Carolina.

If your student isn’t earning an allowance in high school, it’s not too late to start. At the same time, you can talk about what to do with their newfound money, including how much to spend, save, and give/donate.

61% of parents pay an allowance to their kids, with the majority beginning by the time their child was 8 years old.

— The American Institute of CPAs

Should you pay your student for doing chores?

If your goal is to help teach basic financial skills, Smiler says that at least a portion of the allowance should be guaranteed money. It’s important to be clear and consistent about how much the base allowance will be. And, while there is merit in providing additional money based on chores, some chores should be a given.

“I encourage the parents to make the daily chores part of the expectation of living together in community,” Smiler says. Daily household chores might include emptying the dishwasher, walking the dog, and taking out the trash, while additional money-earning tasks could include doing work around the yard and cleaning out the garage. Ultimately, it’s up to the family to decide, he says.

How much should you pay for allowance?

Some families use the unofficial rule of 50 cents to $1 for each year of age (so your 15-year-old could receive $7.50 to $15 per week).

However, there may be other considerations that come into play, most notably what the allowance covers. If your student has to now buy their own clothing, gas, entertainment (like movie tickets), and daily miscellaneous purchases, then make sure you give an allowance large enough to cover these needs.

While allowance amounts vary by age, the average allowance totals $65 a month.

— The American Institute of CPAs 

What are the benefits of giving an allowance?

The most fundamental purpose of an allowance is to help teach students how to manage money. If a teen receives $15 per week, he or she learns that it will take several weeks to save up for something that costs $100.

“That takes some discipline, some willpower, and some planning,” Smiler says. It’s important to not give in and add a couple dollars so your son or daughter can buy something they want. Your resolve will help teach your students how to budget. “They have to manage their money,” he says.

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