Allowance: Show 'em the Money

PSP members share their two cents on what you need to know about allowance.

Original poster asks:

"About three months ago, my son started asking me about the possibility of having an allowance. I was both pleased and a little wary having only recently dealt with the complex conundrum of tooth fairy rate inflation. What’s the going rate in Park Slope? Should he be doing chores in exchange? Was this an opportunity to teach him something about money and if so, what? Would we need to get into credit default swaps? Toxic assets?"

Tips are below, with NEW advice also added from a Summer 2022 thread!

On Chores and More

"There are two basic philosophies when it comes to allowance and chores. One school of thought holds that kids shouldn’t actually be paid to help out around the house. They should be doing that anyway. It’s not hard to imagine a kid declaring that she will forego her allowance this week so that she can doesn’t have to clear the table. Other people like the leverage that 'no help, no allowance' provides, whether attached to specific chores or not. Finally there’s a sort of third way in which allowance is not pegged to chores but may be deducted, say $1 at a time, for bad behavior."
"I'm a firm believer that you don't pay kids for chores. Chores are a part of being in a family."
"I keep allowance separate from chores, and here's why. Doing things around the house is not something, in my opinion, any of us get paid for. We do it because it's our personal responsibility, because we're a part of a 'community' (or family) and when one is a part of a community you step up to help out. Because taking responsibility for ourselves is something I think it's imperative for every child to do, and we keep our house clean because it's healthy and makes sense to do so-- not because we're bribed or paid. So my daughter has things that are expected of her: make her bed, clear her place at the table, put away clean, folded clothing each week, help me walk the dogs, etc, because she's a part of this family and we all pull our own weight as it's age-appropriate, and as we can find ways to chip in. And she gets allowance because I think it's important for her to learn about saving, budgeting, and being responsible financially."
"My twin boys are 12 and have been doing chores since they were seven. I made a chart and one boy does side A (d/w unloading, clean toilets, dust dressers, empty trash) and the other boy does side B (bath mirrors and sinks, takes out both recycling bins) for one month and then we switch it. They also help me put away groceries and put their own clothes (that I wash and fold) away. We usually do the major stuff all together on Saturdays but that varies if anyone has sports etc. I have been a single parent since they were two and started this nicely just to keep them busy and get some help. Now though, I feel very strongly that I want to be sure to raise boys/men that can never say 'I don’t know how to do that kind.' We will see." (2022)
"I do not give allowance or any payment for chores because I certainly don't get paid to do them and it's part of being a citizen of our household. ... Currently, my son's [age 13.5] chores are: clear dinner dishes and scrape them into garbage, take garbage and recycling down to the basement as needed, do his weekly laundry (2-3 loads) and then after I fold it, put the clean clothes away, Lemon Pledge the dining table more or less weekly, vacuum with the cordless vacuum more or less weekly, feed and refill water bottle for the gerbil." (2022)
"We did have responsibilities around the house that were attached to [our son, age 13] earning a phone last year. He had to make dinner twice a week in the summer, once a week during the school year. He had to help around the house even more and assist with picking up his sister or dropping her off in the second half of the year once we were confident in that.
His sister [11] is now starting to work towards her phone and learning similar responsibilities around the house that are a step up from what she has been doing. Having a phone means not saying no to responsibilities ever is kind of our approach. The phone is ever present; so are the responsibilities. If you can't handle one, you can't handle the other.
She has started helping to make dinners as a sous chef with us. Two years ago, it was her idea that she and her brother make dinner for us for our anniversary when we couldn't go anywhere so she's likely to take up the cooking mantle more easily." (2022)

On Lessons and Learning Fiscal Responsibility

"There are all sorts of lessons kids can learn from their allowance. One mom described how her parents had an NPR-style matching fund policy with her allowance, doubling it if she saved it for a given period. This continued right up until college, which meant she had a nice nest egg to take along with her. Of course paying in coins goes hand in hand with the elementary math curriculum, teaching kids to count by ones, fives, tens, etc. One parent described how her son’s fevered calculations as to how long it would take him to save up for the LEGO 'Death Star' have given him a leg-up in 1^st grade math. Then there are all the lessons about priorities, whether it is better to all ones allowance to buy crappy five minute cars from the drugstore or to save up for something really sturdy and spectacular - and they take better care of things they've had to buy themselves. Allowance also make it possible for kids to give to charities that capture their imaginations or to buy gifts for people they love."
"I recommend The Opposite of Spoiled by Ron Lieber—good book talking about things like saving, spending, giving. Brings up some great points I hadn’t thought about—we had a few different book groups around the book."
"I went to Ron Lieber’s 'The Opposite of Spoiled' event at the Park Slope Library and he had some good things to say about allowance: not based on chores, dollar (or $.50) a year; have save/spend/give jars; increase responsibility with money as kids get older, making them responsible for things like clothing, art supplies; failure with money as a kid is a good lesson and may help them avoid it later in life. He also talked about gratitude (and how it’s tied to giving) that I really like. Here’s some more info based on his Slate article."
"I also highly recommend The Opposite of Spoiled! As they got older and now as young adults, our kids were interested in our finances. It was a pretty interesting topic for them. The classic vacation car ride question was, "Where did the money go in the depression?" They were interested in exactly what happens at the bank. What is a mortgage? How much do we save? What does gross and net mean? We made decisions about charitable contribution decisions as a family. I have always worked hourly or as self employed so we were very conscious of money in/money out. Paying off credit cards and the impact of mounting credit was always something that I just talked about whether they wanted to hear it or not. They had debit cards in college. When they finally got real credit cards they were so freaked out in the first month - they were paying them off daily (maybe I went a little overboard on the credit thing). One of them made a budget spread sheet that has proved to be a miracle for saving for them and their friends. Talking about sex and talking about money can be thorny subjects but you have to do it early and often."
"I believe in allowance as an educational tool to learn how to save and spend money. I got a lot of useful info and validation on this from Park Slope Parent Ron Leiber's wonderful book, The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, and Smart About Money -- highly recommended.
Following the advice/model in Ron's book, a few years ago, I raised my son's allowance to $5/week and gave him 3 jars labeled Spend, Save, and Give Away. He was to put $2 in Spend, $2 in Save, and $1 in Give Away; he got to pick the cause/charity the give-away money went to, and he did a bit of great research on that, and I told him I would match whatever gift he gave to charity. He was super-into this set-up at first, but his interest AND ability to maintain it waned.
His allowance is still $5, but will probably need to be raised when he start 8th grade in the fall. When we raise it, the jars are coming back down off the shelf." (2022)

Tracking allowance

Allowance Manager: "We use allowance manager—an app that adds allowance to a 'bank' that they can pull from (with oversight) when they want."
Moonjar

Rates

2022:

"My kiddos, 13 and 16 do get an allowance since they were 8. My 13 year old gets $13 a week and my 16 year old gets $100 a month which I transfer to his bank account. During school he has track practice, so has a snack before practice and a small meal after track and dinner a few hours later. He also has a girlfriend so you know I assist with that. I also do not include clothes or sports necessities like track spikes, sneakers, work out clothes or art supplies. If the kiddos want something that is outside of necessity they pay for it. I just want to state that I have boys and they eat and eat. They also noticed that food is expensive, if they come to me asking for additional funds for food, I am ok with that, but they need to provide a receipt that says they are something healthy. $100 seems much, but from a day to day. It is easy to spend that in a week so I keep reminding my 16 year old to be mindful. He also gets slapped with an over draft fee of $35 if he has insufficient fund in his bank account. My 13 year old goes out for bubble tea, sushi or ice cream at Ample Hill which can be expensive when you only have $13 for the week. I also supplement his food purchases. It’s tricky, they know things are expensive, so hard to get them to save. My 16 year old has been working the last two summers so I not give him an allowance in the summer. I do feel I need to re-evaluate this though."
"I have been giving allowance since [my sons, age 12] were 8. I started at $3 and now they each get $15 but I give money occasionally so am rethinking this for 8th grade. I do NOT connect chores and allowance because I feel that chores are just part of being in and living as a family and allowance is about teaching them how to spend/use/save money."
"Our son just finished 6th grade. They had out to lunch privileges, which he loved. At the start of the school year we told him we’d give him $10/wk for lunch and any other money he had to earn. He has issues getting out of the house on time, so we paid him $2 each day he got out on time."
"Starting in 6th grade when my daughter was traveling a bit for middle school and not coming straight home after school I wanted her to have some walking around money. It started at $5/week then changed to $30 a month. It mostly went to after-school snacks but also included taking friends to Starbucks for their birthday, secret Santa presents and yarn for crocheting. I wanted her to have enough money to basically cover what she needed but a small enough amount that she was aware it was finite and had to budget a little. She very quickly learned what all the various snacks around the school cost.A $4.50 eclair from Colson would eat up most of the week’s money but she could get cookies from the deli by school for 50 cents. The churro lady offered the best value at 3 for $1 and $2 crepes were the best deal at Colson.
Now in high school she gets $20 a week in walking around money, which she uses to buy lunch once in a while and to go to a cafe or deli with her friends after school. And she has ApplePay set up, whch she mostly uses for the subway on non-school days. If she's doing something on the weekend I’ll give her extra money for that. She uses a mix of walking around money and savings for things like yarn, thrift-store shopping, friends’ birthday presents. If she were asking for an extra $50 every weekend we’d have to rethink things. But it’s more like an extra $10-$30 here and there. And after Covid isolation I’m very very happy to fund her social life."
"Our kids have responsibilities around the house that are separate from their allowance. They've received an allowance for a long time that was $.50 per year of their age. At 11 and 13, they now receive $5.50 and 6.50, respectfully. They do use the jars of Save, Spend and Give and have once bought a big item together from the Save jar that my husband and I rolled our eyes at but it was their money.
This year, my son started going out for lunch. We gave him money because we would be paying for his food if he went to the cafeteria. If he had leftover money and he wanted to spend it on snacks, that was fine. We calculated low on the average amount he would need per day but realized the neighborhood had higher prices and raised it so the money was covering him."

2017:

"Standard pricing seems to be $.50/year for the age of the child (ie. child is 6, child gets $3)-$1/year for the age of the child (ie. child is 6, child gets $6). There are variations in between this, particularly as the kids get older."
"For about 2 years now, my son (now 10+ years old) has been getting a $5 a week allowance. (We have not done a cost-of-living increase over that time.) He has chores that he has to do throughout the week, but they are not tied in any way to the allowance. If he doesn't do his chores there are repercussions, but they don't affect his allowance. Our arrangement is that the allowance is to teach him the value of money, the tradeoffs that come with having limited funds, the responsibility to safeguard money, the importance of savings and the importance of generosity. Of the $5 he is supposed to put a portion, $1, in the bank for college, and he's supposed to give $1 to a charitable cause of his choosing. We don't keep tight track of it, but it looks like it comes out about where it should at the end of the year, with him having spent about $150, having $50 in his piggy bank and having $50 that he more or less recalls having given to various needy people or causes. He's allowed to spend the money any way he wants, including on Pokemon cards, video games, school bake sale, the Scholastic school book sale, loaning or giving money to friends, and even buying candy. It's interesting to see the choices he makes. With the charity portion, sometimes he gives all $5 to a homeless person, and sometimes he doesn't give anything to any charitable cause for weeks. He seems to really enjoy the independence of having money, making decisions about the money, and not being judged on how he spends the money. I often tell him that I would not have spent money in some way that he has, but try always to remember to say at the end of that "but it's your money to spend how you wish." $5 probably is a little low for the going rate, but my husband and I also buy most of the things he needs. So it seems like $5 is the right amount to accomplish with the allowance is supposed to, namely, give him a sense of what money is and the power and responsibility it carries Before the allowance I think things like savings and budgeting were really abstract for him. This allowance exercise seems to have helped lay the groundwork for him to be responsible and have a healthy relationship with both spending and saving. Incidentally, we also have a five-year-old, and he has not asked for an allowance, though he knows that his brother gets one, nor would we give it to him if he did ask for it. The allowance is a teaching tool at this point, and he seems too young for that lesson. I'll be interested to hear how others handle this. I'm sure there are many great approaches to helping kids grow into fiscally responsible adults."

2015:

"About six months ago, we started giving our 7-year-old daughter an allowance. After much debate, we started her off at $1.25 per week, which seems enough for her to buy the occasional stuffed toy she wants. We keep her money in a little "bank" we set up that pays 4% interest monthly to give her an incentive to save. Periodically, she adds more from lemonade stands, extra chores we pay her for, gifts from relatives, etc. She can withdraw as much as she wants, anytime, for any reason. Right now, she has a balance of $25 in her account and is mulling her next move (earn more, save more, or spend more). We may increase her allowance later - it's always easier to give a pay raise than a pay cut! - but now this feels about right as she begins to learn the value of a dollar. Update: Just as I was about to send this, she blew the entire $25 on four stuffed animals, so she now has a zero balance. Well, it's her money. Now she will learn how to save!"
"For my 11 year olds: $5.00/week and they have to empty dishwasher, fold laundry and walk the dog."
"I have an 11 year old. We give her $5/week, which she usually uses to buy lunch once a week (her school allows kids to go outside). One of her grandparents gives her cash for her birthday. She has to keep a written account of what she buys with that (builds basic book-keeping skills) and ask before she can buy anything with it. She sometimes uses it to supplement pocket money to buy a treat or to buy something she really wants."
"We give $5/week to our 10 year old. She doesn’t eat out so lunch isn’t part of the equation. And it's not tied to chores. We set it up so she puts some money each week into different “pots”, one for donating to a charity or cause of her choice, one for “long term savings” to be spent on a “bigger” item she wants (last nice sum she saved went to her hair color, other things she’s spent on: accessories for her dolls, books, art, souvenirs when we travel), and one pot for daily spending such as snacks and other little things."
"In middle school, we started giving our daughter $10 a week. We usually dole it out $20 twice a month and she has to budget it. Lunch isn't part of the equation. Her school doesn't have out lunch but I would expect her to bring a bag lunch regardless, just as her parents do. If she has a birthday gift to buy, we take care of that, or any other special events. She also earns extra money babysitting her brothers and saves her birthday money. We also provide a metro card. A lot of middle school socializing centers around eating, esp. with girls. On Fridays, they all go to Starbucks or Shake Shack, or Five Guys. That's mostly where the money goes. I imagine next year in high school, we will raise it a bit but I don't think kids need tons of cash. That can lead to trouble."

2013:

"My daughter is 7 and has been getting an allowance for about a year. It's currently two dollars a week. She has a bank that has 3 compartments: spend, save, and "give away". She gets to put a dollar in spend to use as she likes, and then has to put 50 cents in save, and 50 cents in "give away". When she gets a certain amount in "give away," she decides where to give it (lately it's been for dog rescue, because we volunteer for a local group).

2011:

"Unlike Tooth Fairy rates, which are regulated by a Byzantine system controlled by secretive guilds, allowance rates are really a matter of personal preference. For some it was as simple at $5 per week, minus deductions for heinous behavior. Others used formulae like $3 per year of age per month, or the one we went with in the end, $.50 per year-of-age per week. Interestingly no one suggested financial incentives for good behavior."

OUTCOMES and LESSONS LEARNED...

The Joys of Fiscal Responsibility -- or Not

"A few months down the road, I am happy to say that the allowance is working out pretty well. I was bowled over when number one son spontaneously used his allowance to buy a gift for his little brother and delighted when he decided not to blow his savings on DSi credits and invested in LEGO pirates instead, a purchase that has brought him many hours of joy. Kid brother wants to get in on the act too, though he doesn’t quite grasp that it will take him approximately 4 years to save enough to afford the vintage Batman LEGO set for which he lusts. The only bumps in the road have, surprisingly (or maybe not surprisingly at all) come on my end. I have neglected to give the allowance on a number of occasions, which would be fine if I were keeping better track. Right now we are in mortal danger of becoming the parental equivalents of Lehman Brothers. Surely there must be an app for this?"