savings

How Much Allowance Should My Kid Get?

A weekly allowance can be an important tool to help teach your son or daughter about how to manage money.

The average weekly allowance is now $30, according to a recent survey by the American Institute of Certified Public Accountants. If they saved it, kids would have enough cash to buy a used car within a few years. But kids aren’t banking most of their allowance. They’re spending most of it on outings with friends, digital devices and downloads, and toys, AICPA says.

Whether your child’s allowance is above or below the average, the lessons delivered with the money are more important than the amount. If you require your kids to perform chores to collect an allowance, they will understand that they must put forth an effort to earn a paycheck, says David Almonte, a member of the AICPA Financial Literacy Commission. If you increase your child’s allowance each year, you can use it as an opportunity to talk about inflation. Even if you can’t afford an allowance, take advantage of everyday activities, such as buying groceries, to impart financial lessons.

Rather than set hard parameters on the amounts that your kids should spend and save, let them come up with a budget with some guidance from you. If they blow their allowance and fail to save enough for bigger items that they want, they may figure out how to delay gratification while the stakes are low. “Let them make some mistakes while they’re young and can learn from them,” says Roger Young, senior financial planner for T. Rowe Price.

Most Popular

When Could We Get a Third Stimulus Check?
Coronavirus and Your Money

When Could We Get a Third Stimulus Check?

President Biden and others in Congress are pushing for a third-round of stimulus checks, but it might be a while before we get them.
January 20, 2021
Where's My Stimulus Check? Use the IRS's "Get My Payment" Portal to Get an Answer
Coronavirus and Your Money

Where's My Stimulus Check? Use the IRS's "Get My Payment" Portal to Get an Answer

The IRS has an online tool that lets you track the status of your second stimulus check.
January 18, 2021
20 Best Stocks to Buy for the Joe Biden Presidency
stocks to buy

20 Best Stocks to Buy for the Joe Biden Presidency

Joe Biden has been sworn in as America's 46th president. These are 20 of the best stocks to own under the new administration.
January 20, 2021

Recommended

6 Money-Smart Ways to Spend Your Second Stimulus Check
Coronavirus and Your Money

6 Money-Smart Ways to Spend Your Second Stimulus Check

If you don't have to use your second stimulus check for basic necessities, consider putting the money to work for you. You'll thank yourself later.
December 28, 2020
Getting Married or Moving In Together? Time to Talk About Money
Starting a Family

Getting Married or Moving In Together? Time to Talk About Money

Sharing a life means it’s time to talk finances.
December 22, 2020
11 Tax Breaks for the Middle Class
Tax Breaks

11 Tax Breaks for the Middle Class

Tax breaks aren't just for the rich. There are plenty of them that are only available to middle- and low-income Americans.
December 17, 2020
Is Pet Insurance Worth It?
Making Your Money Last

Is Pet Insurance Worth It?

If you’ve added a dog or cat to your family, consider pet insurance to manage routine and unexpected veterinary bills.
December 16, 2020