The Best Allowance
System for Kids
How much per week. When to start. Tied to chores or not. The 3-jar system. And why most parents overcomplicate this.
Start at age 5-6. Give $1 per year of age per week ($6/week for a 6-year-old). Split into 3 jars: Spend, Save, Give. Don't tie it to basic chores. Do offer paid "extra jobs" beyond expectations. Increase annually. Let them make mistakes with small money so they don't make them with big money.
How much should you give?
The great debate: tie it to chores or not?
Parents argue about this endlessly. Here's what the research says:
Financial journalist Ron Lieber argues allowance should be separate from chores Source: Ron Lieber, 'The Opposite of Spoiled' because the purpose of allowance is to practice money management, and the purpose of chores is to contribute to the household. Tying them together teaches kids that housework is optional if they don't need money.
The system: Allowance is automatic. Chores are expected because you're part of a family. These are two separate things.
Dave Ramsey advocates for commission-based allowance Source: Dave Ramsey, 'Financial Peace Junior' : you work, you get paid. You don't work, you don't get paid. This teaches the direct connection between effort and earning that mirrors the real world.
The system: No work, no pay. Specific tasks have specific values. Kids earn based on effort.
Base allowance is automatic (for practicing money skills). Basic chores are expected (for being part of a family). "Extra jobs" beyond basics are available for additional pay (for learning to earn). This gives kids both money practice AND the work-earn connection. 72% of parents who use a hybrid approach report their kids are more confident about money Source: T. Rowe Price 2024 Parents, Kids & Money Survey .
The 3-jar system (it works because it's simple)
For whatever they want, right now. Candy, toys, games. No judgment. No veto (within reason). This is where they learn that money is finite and choices are real. Blowing it all on day one is the best lesson they'll ever get.
For a bigger goal they pick. A toy that costs $30 when they only get $7/week. Saving for 5 weeks and finally buying it is more satisfying than having it handed to them. Tape a picture of the goal on the jar. Check progress together weekly.
For helping others. They pick the cause: animal shelter, food bank, a classmate's fundraiser. When the jar fills up, go deliver it together. This jar teaches that money isn't just for you. Children who practice charitable giving develop stronger long-term financial behaviors Source: Journal of Economic Psychology, 2019 .
Use clear jars so they can SEE the money grow. That visual matters more than you think, especially for kids under 8 who are still developing abstract thinking about numbers.
Recommended amounts by age
| Age | Weekly amount | Spend | Save | Give | Notes |
|---|---|---|---|---|---|
| 3-4 | $0-1 | $1 | - | - | Coins only. Practice handling money, not managing it. |
| 5 | $2-3 | $1.50 | $1 | $0.50 | Introduce 2 jars (Spend + Save). Give jar optional. |
| 6 | $3-4 | $2 | $1.25 | $0.75 | Full 3-jar system starts. First real savings goal. |
| 7 | $4-5 | $2.50 | $1.50 | $1 | Extra jobs available: $1-2 each beyond basic chores. |
| 8 | $5-6 | $3 | $2 | $1 | Give them a real budget to manage (school supplies, etc.). |
| 9-10 | $6-8 | $4 | $2.50 | $1.50 | Move to biweekly to practice longer planning. |
| 11-12 | $8-12 | $6 | $4 | $2 | Open a bank account. Digital tracking starts. |
| 13-14 | $12-15 | $8 | $5 | $2 | They cover their own entertainment spending. |
| 15+ | $15-20+ | Self-managed | Transition to earning. Allowance covers specific expenses. | ||
The national average allowance is $9.80/week for kids ages 4-14 Source: AICPA 2023 Allowance Survey . These recommendations are based on the "$1 per year of age" guideline used by most financial literacy organizations, adjusted for purchasing power and age-appropriate responsibility levels.
4 mistakes that undo the whole system
Keep going
The allowance system is step one. For the full picture of financial literacy by age, including conversations to have, activities to try, and mistakes to avoid: How to Teach Kids About Money at Every Age.
For the parent's side of the equation: The One-Page Family Budget and How to Talk About Money Without Fighting.
Sources: Allowance survey data from 2023 AICPA national allowance survey Source: AICPA . Hybrid approach data from 2024 Parents, Kids & Money Survey Source: T. Rowe Price . Charitable giving and financial behavior from 2019 longitudinal study on youth financial socialization Source: Journal of Economic Psychology . Age-appropriate amounts based on guidelines from Jump$tart National Standards in K-12 Personal Finance Education Source: Jump$tart Coalition . This guide is educational. Families should set amounts based on their own budget and values.
