Schwab MoneyWise ®

Managing an Allowance

Introducing a new world of financial responsibility

Our Two Cents

Giving kids an allowance is an effective way to teach money management skills and the value of work. It also gives children a chance to open an account of their own and start saving.

Getting an allowance is an exciting rite of passage. It provides a whole new world of responsibility and independence as your child learns basic money management skills, like budgeting and saving, which can help them throughout life. Here are some tips to help you decide how and how much to give:

  • Give an allowance that's appropriate for your child's age. Many parents base the amount on the "going rate" in their community. Ask other parents how much they give their kids. Give within your own comfort zone and be consistent.
  • Set clear expectations. Do you expect your child to pay for certain expenses? If so, which ones? Be sure to discuss these responsibilities thoroughly so there are no questions later.
  • As your children age, change the allowance accordingly. For example, when they're younger, limit the payment time frame, keep the amount small, and begin to set expectations such as whether they need to earn their allowance and what expenses they're expected to pay. As your kids get older, say 14 to 18 years old, use the allowance to reflect the real world. Pay your children every two weeks, or even monthly. Have them create a budget. Increase the amount you give them, but also increase their responsibilities.
  • Let them learn from mistakes. Children will be children, and that's OK. Expect yours to do some unexpected things with their money—and to make some unwise decisions.
  • Support them, but don't rescue them. If your children make a financial error, don't rescue them with more money. Help them work through the situation and arrive at a solution.

Allow your kids to learn. Remember, the purpose of an allowance is to let young people learn how to manage money firsthand, through their own successes and failures.

Should an allowance be earned? Consider the pros and cons.

Should an allowance be tied to chores? It's an important question with no right or wrong answer. Consider these perspectives when determining how to approach this topic with your family:

  • Pros: Linking an allowance to chores helps children learn how to earn money by doing something and getting paid for it. Earning an income fosters responsibility and reinforces the value of work.
  • Cons: On the other hand, some parents are against linking chores to an allowance because they believe that household chores are the responsibility of every family member. Instead, an allowance can be separated from chores and used as a tool to teach financial values and habits.

Whether or not your child is expected to earn an allowance, be sure to:


The information on this website is for educational purposes only. It is not intended to be a substitute for specific individualized tax, legal, or investment planning advice. Where specific advice is necessary or appropriate, consult with a qualified tax advisor, CPA, financial planner, or investment manager.

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