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.