Breaking down allowances for elementary schoolers

How much allowance should you consider giving your child, what do other parents pay, and what could the money be used for? A guide for parents of young children.

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Allowances are popular

More than half of parents who give an allowance start by age 8.*

Many experts agree that an allowance can be a helpful tool for teaching children how to handle money. This lesson is best learned when parents take an active role, explaining to their children why they are receiving an allowance and how to manage it.

*Statistics in this piece are pulled from a 2012 study—the most recent available—by the American Institute of Certified Public Accountants (AICPA), except where otherwise marked.

The going rate varies

You may not know what your neighborhood’s going rate is, but chances are your child does. You may be surprised when you learn how much others are doling out:

$6/week — The average amount for a child age 4–12

Where you live matters

For kids ages 4–12, those in rural areas think a lower amount is appropriate:

Rural

$3.30/week

Urban

$4.30/week

Suburban

$4.30/week

What can I do?

Experts typically recommend giving young children 50 cents to $1 per week for every year of their age. Some parents start with a smaller amount and only raise it once they feel their child can handle the responsibility of managing money.

Most kids have to earn it

9 out of 10 parents require their kids to work 1 hour a week.

Experts, though, are split on that strategy. Some like the idea that kids earn their money, but others think the cash should be strictly a hands-on, money-management teaching tool. Kids should still do their chores, the philosophy goes­—just as all members of a family should—but they shouldn’t get paid for them.

And most parents require kids to save it

Many children would rather spend their allowances on toys and treats.

To combat that, 54% of parents require children to put away at least a portion of their allowance each week.

Source: Consolidated Credit, 2012 (most recent data available)

What can I do?

Experts recommend parents ask even young children to save a portion of their allowances (say, 25 percent). To encourage savings, parents could suggest that their son or daughter set a short-term savings goal, such as a desired toy.

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The material provided on this website is for informational use only and is not intended for financial or investment advice. Bank of America and/or its affiliates, and Khan Academy, assume no liability for any loss or damage resulting from one’s reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own financial professional when making decisions regarding your financial or investment options.

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