A recent Finder study reveals that 60.6% of American parents pay allowances to their kids, ages 4 to 18, and pay a collective total of $1.9 billion in allowance each year!

This guide breaks down the pros and cons of giving your kid an allowance, how much you should pay them and how to set up a system that works for you.

Should I give my kid an allowance?

It depends on your family situation. If you’re on the fence about giving your kid an allowance, consider these pros and cons.

Pros

  • Opens up a conversation. Money is often seen as taboo in our society — right up there with the birds and the bees. Allowances are a great way to start having conversations with your kids about how to use money responsibly.
  • Teaches them financial responsibility. As your kid earns money, they’ll learn how to manage it responsibly by saving some for bigger purchases, spending it wisely, and giving some to those in need.
  • Good motivation. Earning an allowance is a great incentive to get chores done promptly. It’s also a great incentive to earn good grades.
  • Spending money. Your kid can use their allowance to cover any nonessentials, like new clothes, a video game, or a new toy at the store.
  • It gives them a safe place to make mistakes. It’s better if your child makes $10 mistakes with their money now, so they can learn from those lessons and avoid making $10,000 mistakes as an adult.

Cons

  • Your kid could get the wrong impression. If you pay your child for everyday household chores, they may get the impression that they should be rewarded for anything and everything they contribute to the family.
  • It could overstrain your budget. Allowances could strain your budget if you have multiple kids or a low income.
  • Kids could lose motivation. Once your child has saved up enough money to get what they want, they could slack on chores or good grades.
  • It’s another thing on your to-do list. You’ll have to remember to assign chores, track your kids’ progress, pay allowances each week, and monitor their spending on top of your other household duties.

Should I pay my kids for completing chores?

It’s ultimately up to you to decide if you should pay your kids an allowance for completing chores. There’s no right or wrong answer.

There tend to be two schools of thought on the subject. Some people argue against paying kids for completing chores, saying you shouldn’t pay them for completing tasks they should be doing anyway. Others argue it’s a great way for them to learn the value of earning a dollar.

If you’re personally concerned about teaching your kid about responsibility, an alternative is to pay your child for completing tasks that go above and beyond what’s expected of them instead of paying them for chores they should be doing daily.

The most common requirements to earn an allowance.

We asked parents what their children need to do to earn their allowance, and 43.1% said that they pay their kids an allowance for completing chores.

Activity% of respondents that gives their child an allowance
Chores
43.1%
Get good grades
41.0%
Nothing
14.6%
Other (please specify)
1.4%

Most common requirements to earn an allowance by parents’ gender

Interestingly, more women than men said they require their children to do chores to earn their allowance. That’s 60.8% of mothers compared to 29.4% of fathers. And more men than women said they require their children to get good grades to earn their allowance. That’s 52.8% of fathers compared to 25.6% of mothers.

Activity% of fathers who give allowance% of mothers who give allowance
Chores
29.4%
60.8%
Get good grades
52.8%
25.6%
Nothing
16.6%
12.0%
Other (please specify)
1.2%
1.6%

4 steps to start an allowance for your kid

Follow these steps to find out how much you should pay your kids and get an allowance system in place that works for your family.

1. Create a budget
First, examine your own budget to determine how much money you can comfortably
give your kids each week. It’s not the size of the allowance that counts — it’s what your child learns to do with it. If all you can give is a few
bucks a month, your child can still learn valuable life lessons from that. Do what works best for your family and budget.

2. Determine how much to give as an allowance
The most common rule of thumb is to pay out weekly allowances based on your kid’s age. If your child is five, they will receive $5 a
week. If they’re 15, they will get $15.

Our study found this isn’t always the case. For example, the average allowance for five-year-olds is $4.83, and for 18-year-olds, it’s $18.28 — both on par with the rule of thumb.

But 16-year-olds received $23.11 a week, and 17-year-olds received $26.73 a week — the highest allowance amounts on our list. If we had to guess, this is most likely because 16 and 17-year-olds are just starting to drive and may be involved in more after-school activities. By the time they turn 18, they may already have their own part-time job or head off to college.

3. Pick an allowance method
Decide how you’d like your child to earn their allowance. A few ideas include:

  • Chores. Most parents pay their kids an allowance for completing chores. This could be anything from brushing their teeth, making their bed, unloading the dishwasher, and cleaning the bathroom.
  • Good grades. Another common way kids earn an allowance is by receiving good grades. Some parents even break it down by letter grade by designating a dollar amount for each A, B, and C.
  • Odd jobs. If you don’t want to reward your child for regular household duties, you can let them earn extra money for doing one-off tasks like cleaning the grout, clearing out the attic, or organizing the coat closet or for chores they aren’t doing daily, like mowing the lawn.

4. Choose your funding
There are three main ways to pay out allowances.

  • Cash. Cold hard cash gives your kid a tangible way to learn to manage money. They can keep it in a piggy bank and use it to buy things in person. But it could be a hassle if they want to buy something online, or you find yourself having to run to the ATM each week.
  • Debit card for kids. This is the most popular option for parents because your kid gets access to an app that teaches them how to save, give and spend. Some cards like Busykid will even teach your kid how to invest their money wisely. These are also a good option for parents looking to set up chores, automate allowances, set savings goals and monitor their kids’ spending.
  • Stars or coupons If your child is too young to handle real money, consider using an app like RoosterMoney or Bankaroo. Both let you assign stars, coupons, or virtual money for completing chores. Then, your kid can cash them in for prizes or donate them to charity when they’re ready.

Average allowance for kids

This table highlights the average allowance for kids based on their age. As you can see, there’s no set standard across the board, but we found that our respondents gave each of their children a median allowance of $11.32.

How much allowance are parents giving their children by age?

Age of childMedian allowance
4 years old
$4.86
5 years old
$4.83
6 years old
$4.83
7 years old
$6.14
8 years old
$4.60
9 years old
$8.21
10 years old
$4.83
11 years old
$12.19
12 years old
$5.98
13 years old
$9.66
14 years old
$18.42
15 years old
$18.42
16 years old
$23.11
17 years old
$26.73
18 years old
$18.28

Methodology

Finder’s data is based on an online survey of 1,704 US adults born between 1928 and 2003 commissioned by Finder and conducted by Pureprofile in January 2021. Participants were paid, volunteers.

We assume the participants in our survey represent the US population of 254.7 million Americans who are at least 18 years old, according to the July 2019 US Census Bureau estimate. This assumption is made at the 95% confidence level with a 2.36% margin of error.

The survey asked respondents whether they had children between the age of 4 and 18 and, if so, whether they gave their children an allowance. Parents who gave their children an allowance asked what their children needed to do to earn their allowance and how much they gave their children in allowance. Average allowance calculations refer to the median allowance given by parents for each eligible child.

We define generations by birth year according to the Pew Research Center’s generational guidelines:

  • Gen Z — 1997–2003
  • Millennials — 1981–1996
  • Gen X — 1965–1980
  • Baby boomers — 1946–1964
  • Silent generation — 1928–1945

Bottom line

If you decide to give your kid an allowance in a more digital and trackable way, consider a debit card for kids. You’ll save time by setting up chores and allowances in advance, and they’ll be able to track their spending and their progress toward bigger savings goals.

This post originally appeared on Finder.com