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Allowance Strategies for Different Ages: How Much and How to Pay Your Kids
Kevin Murray
January 12, 2025
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When it comes to teaching kids about money, an allowance can be a valuable tool. It introduces the concept of earning, saving, and spending responsibly from an early age. However, the big question for many parents is: How much should I give my kids, and how should I structure their allowance?
The right approach varies by age and maturity level, so let’s dive into some effective strategies for giving kids an allowance at different stages of their development.
1. Early Childhood (Ages 4–7): Building Basic Understanding
At this age, kids are just beginning to grasp the concept of money. They’re curious, eager to help, and starting to learn the value of responsibility.
Allowance Strategy
Start small, both in terms of the amount and what the allowance is tied to. Consider giving them a weekly allowance for completing simple, age-appropriate tasks like picking up toys, helping set the table, or feeding a pet.
How Much: $1–$3 per week
How to Pay: Give them physical cash to help them understand that money is a tangible exchange for their work.
Teaching Moments
Introduce the concept of saving by encouraging them to put a portion of their money aside.
Use clear jars labeled “Save,” “Spend,” and “Give” to help them visually understand the difference between these financial goals.
2. Early Elementary (Ages 8–10): Developing Financial Habits
At this stage, kids are ready for a more structured allowance system. They’re capable of taking on a few more responsibilities around the house and are starting to understand the basic principles of earning and saving.
Allowance Strategy
Tie their allowance to more meaningful chores that contribute to the household, such as cleaning their room, doing the dishes, or helping with yard work. You can also introduce additional opportunities to earn extra money for larger tasks.