Allowance Calculator for Kids

Avoid These Common Allowance Mistakes

Giving your kids an allowance is usually considered to be a good idea. After all, it's never too soon to learn about financial responsibility.

Giving your kids an allowance can also teach them other important concepts, including:

  • Delayed gratification—saving for things they really want
  • Charity and helping others
  • Budgeting

Allowance Versus the Consumer Price Index (CPI)

Mother handing girl one dollar bill
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As some parents try to figure out their child's allowance, they simply give them the same amount that they got as a child.

Is that a good idea? Probably not.

Consider that when you were a kid, you could get a lot more for your money than your kids would be able to with the same amount now. If you got $1/week, for instance, that's not going to get a kid very far these days.

To be realistic, you can use the CPI or Consumer Price Index to take into account the way that prices have changed over the years.

How Much Allowance to Give

10 year old holding jar full of pocket money
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So how much allowance should your child get? It really depends on what you expect your child to spend it on.

In general, if it's simply extra spending money, then the allowance would usually not be very much at all. But if you expect your child to pay for many of his or her own day-to-day expenses, then it should be higher.

Some general allowance guidelines that you can consider when you're deciding how much to give your child include giving him or her:

  • One dollar per year of age every week or every other week. If that's too much, give it monthly or quarterly. The idea is to have a formula that will slowly increase as your child gets older.
  • What he or she is now spending on the things you expect him or her to use the allowance on.
  • What his or her friends at school and in the neighborhood are getting.
  • An amount that can be split into thirds: one-third for saving, one-third for spending, and one-third for charitable contributions, whether that's church offering or your favorite charity.

Allowance Mistakes

A child bringing in the recycling can - a common chore for kids.
Avoid common mistakes when giving your kids an allowance, like tying an allowance to doing chores. Photo by Getty Images

When giving your child an allowance, it's important not to make these common mistakes:

  • Don't associate your child's allowance with specific chores, because he can then simply stop doing his chores and say he doesn't want the money anymore. That said, you can allow your child to earn money, beyond her allowance, by doing extra chores.
  • Don't withhold your child's allowance as a punishment. Take away privileges instead.
  • Don't continue to give your child money for extra things, in addition to giving her an allowance. While that's fine if it's what you want to do, you aren't teaching your child anything about financial responsibility, which is one of the main reasons to give her an allowance.

Other Allowance Advice

Other important factors to keep in mind include:

  • Give your child his or her allowance each and every week, whether or not he or she remembers to ask for it. This helps your child learn how to budget.
  • Encourage your child to set aside a certain amount each week for short-term and long-term savings.
  • If your child runs out of funds before the next payday, don't bail him out. Part of the point of an allowance is to learn how to prioritize and budget and giving her an advance doesn't help her learn how to use her money carefully.
  • Consider encouraging your child to set aside part of his or her allowance for charity.

Source:

American Academy of Pediatrics. Allowance for Teens. HealthyChildren.org. Updated November 21, 2015.