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How to Pay An Allowance

I have two kids, eight and four, and we have tried an allowance system with the eight year old but have somehow failed miserably. I went digging on the best ways to pay your kids an allowance and this is what I found.

Paying an Allowance

How to Start Paying Kids an Allowance

1. Do not make allowances chore-based.

This was unanimous with everyone. Your kids should have money of their own, but they should be required to participate in the responsibilities of family because they are a part of it. Mom of two (ages seven and nine) Hazel Larkin says, “I thought about linking allowances to chores but decided not to because we work together to make living here more enjoyable for everyone. Chores are not done for monetary reward, and they are non-negotiable. My girls clean up their own rooms because they have a responsibility to. There is no way I am going to start paying my children to tidy up after themselves!”

2. Make allowances consistent.

If you come up with an allowance plan, no matter what it is, stick with it! Nothing is more confusing to kids than wondering why they aren’t getting their allowance from week to week. There are even online services like and to make consistency easier. With these sites, you can set up automatic payments to your kids. The site also has money management tools like goal setting. You are “virtually” paying your child while the money stays in your pocket, and no more arguing about whether or not you paid the child.

3. Establish rules for allowances up-front.

If you require they save some, spend some, and give some, then lay out those rules ahead of time. In our house, my husband and I use an envelope system for our expenses, saving for projects and charity. Diane Brogan recently wrote about a similar system on her blog designed just for kids called Kid Budget.  The system comes with it’s own envelopes and a guide to help. You may also have rules on how your kids use the money. For example, Larkin says her kids are not allowed to buy gum with their allowances.

4. Decide how much allowance to pay.

The amount itself really doesn’t matter too much. Angel Zapata from Wells Fargo has written a great article on the subject.  In it she says:

“Pay a Modest Allowance.Though these challenging financial times may make paying your children an allowance difficult, many financial advisors view an allowance as an important tool for children to learn and practice money management skills. Try a dollar a week for each year of the child’s age. Or consider adding up what you spend on your child’s “wants” each week and giving the child that amount to manage. More important than the amount is that everyone understands the rules up front – including the completion of necessary chores – and that you pay the allowance consistently and on time. If your family finances change and adjustment to the allowance becomes necessary, it’s an additional learning opportunity for your child.”

5. Don’t be afraid to try something completely different with allowances!

Alisa Weinstein has come up with a whole new concept. Weinstein’s plan allows kids to earn their allowance by doing “real” jobs the same way we do. Her new book Earn It, Learn It and corresponding website, gives parents the tools to have their kids learn real world responsibility, manners, and self-confidence by choosing career paths that interest them or career paths that may stretch them a bit. The book includes 49 careers with “jobs” easily enough for a four-year-old, yet will still challenge a 12-year-old. You will find everything from being a Disc Jockey or a Geologist to a Meteorologist or a Travel Agent. For example, your little disc jockey might be tasked to:

-Get to know a new musical genre

-Find one, two or three songs that combine unrelated genres

-Create a daily playlist of songs that make great background music for that day

Weinstein gives plenty of background and clarity to make these “jobs” that everyone in your family will look forward to being involved in.

So don’t hold back!  Come up with an allowance program that you can implement and be consistent with, whether it is simple or complex. Pick an amount to pay and dive in! Your kids will have the opportunity to learn first hand about money and hopefully be better financially prepared adults. And, you may even learn something, too. Like Hazel Larkin says, “Believe it or not, giving my girls an allowance has also prompted me to re-assess my own relationship with money.”

Now I just need to follow my own advice

I would love to hear your allowance thought, tips, tricks and rules.  Please comment and let us all know!


Hazel Larkin blogs at

Family Mint is at

Money Trail is at

Diane Brogan blogs at

Kid Budget is at

Wells Fargo at

Alisa Weinstein at and bookstores everywhere


Special thanks to Alisa for a review copy of her book and to Wells Fargo for Angel Zapata’s article.


  1. Pam at MoneyTrail

    August 27, 2011 at 12:22 pm

    Great article, Carrie! Thanks for the nice mentions and descriptions of our services. Just a note — we can be found at — not .com.

    There are lots of great options and opinions on kids and allowances. Finding the solution that meets the needs and matches the value of your family is the key to making it work!

  2. Bill at FamZoo

    August 27, 2011 at 12:03 pm

    Nice tips.
    Some options on the chore front:
    * “Chore Fail” chart – particularly when you get to those jaded teen years:
    * Compensate for extra big chores outside the expected

    Other options for #2 – ThreeJars, Zefty, and, oh yeah, FamZoo :-)

  3. Jacqueline Wilson

    August 27, 2011 at 7:41 am

    I’m on the fence about chores. When our oldest were growing up, we had regular chores that everyone was responsible for and then a list of additional “special” chores where they earned their allowance. I’ll have to think about it for the 3 year old.

    However, I LOVE the “jobs” idea–learning finance AND another topic. Brilliant.

    Thanks for the great info!

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