Setting Allowances and Chore Systems
Definition and Key Concepts
An allowance is a fixed, recurring payment given to children at regular intervals (typically weekly) to provide hands-on experience with money management. Chore systems are structured frameworks connecting household tasks to expectations or compensation.
Research shows that 69% of American parents give their children allowances, with the average weekly amount at $9.80 (RoosterMoney, 2023). Children who receive and manage allowances score 15% higher on financial literacy assessments at age 18 compared to children without allowance experience (Jump$tart Coalition).
Two primary allowance philosophies:
| Approach | How It Works | Pros | Cons |
|---|---|---|---|
| Unconditional allowance | Fixed amount given regardless of chores | Separates money from work; allows focus on learning money management | May not teach earning connection |
| Commission-based allowance | Payment tied to completing specific tasks | Connects effort to reward; mirrors adult employment | May reduce intrinsic motivation for family contribution |
The hybrid approach (recommended):
Many families combine both philosophies:
- Base allowance: A small unconditional amount for money management practice
- Expected chores: Unpaid tasks that are part of family membership (making bed, clearing dishes)
- Extra earning opportunities: Paid tasks beyond basic expectations (washing cars, deep cleaning)
This approach teaches that family members contribute without payment while also providing opportunities to earn more through extra effort.
How It Works in Practice
Setting Allowance Amounts
National average allowances by age (2023-2024):
| Age | Low Range (Rural/LCOL) | National Average | High Range (Urban/HCOL) |
|---|---|---|---|
| 5-6 | $3/week | $5/week | $8/week |
| 7-8 | $5/week | $8/week | $12/week |
| 9-10 | $7/week | $10/week | $15/week |
| 11-12 | $10/week | $13/week | $20/week |
| 13-14 | $12/week | $18/week | $25/week |
| 15-16 | $15/week | $22/week | $35/week |
| 17-18 | $20/week | $30/week | $50/week |
LCOL = Low cost of living; HCOL = High cost of living
Common formulas:
- Dollar-per-year formula: $0.50 to $1.00 per year of age, weekly. A 10-year-old receives $5-$10/week.
- Half-age formula: Half the child's age, weekly. A 12-year-old receives $6/week.
- Budget-based approach: Calculate what the child should purchase with their own money (candy, small toys, arcade visits), then provide an amount that makes those purchases achievable in 2-4 weeks of saving.
Regional adjustment guidance:
Adjust allowance amounts by approximately 25-50% based on local cost of living:
- High-cost areas (NYC, San Francisco, Boston): Add 30-50% to national average
- Medium-cost areas (most suburbs): Use national average
- Low-cost areas (rural, small towns): Reduce by 20-30% from national average
Structuring the Hybrid System
Component 1: Base Allowance (Unconditional)
Amount: 40-60% of total weekly amount
This portion is given regardless of chore completion. Its purpose is to provide consistent money management practice.
Example for a 10-year-old with $10/week total:
- Base allowance: $5/week (given every Saturday morning)
Component 2: Expected Chores (Unpaid)
These are age-appropriate tasks required for family membership. No payment is attached. Consequences for non-completion are non-financial (loss of screen time, earlier bedtime).
| Age Range | Sample Expected Chores |
|---|---|
| 5-7 | Put away toys, make bed (with help), set table, put dirty clothes in hamper |
| 8-10 | All above plus: clear dishes, take out trash, feed pets, keep room tidy |
| 11-13 | All above plus: load dishwasher, vacuum common areas, mow lawn (with supervision) |
| 14-17 | All above plus: do own laundry, prepare simple meals, babysit younger siblings |
Component 3: Extra Earning Opportunities (Paid)
These are tasks beyond normal expectations, available for additional compensation.
| Task | Suggested Payment | Notes |
|---|---|---|
| Wash car (exterior) | $5-$10 | Parent's car or family vehicle |
| Wash car (interior and exterior) | $10-$15 | Deep clean |
| Deep clean bathroom | $5-$8 | Beyond normal tidying |
| Organize garage or basement | $10-$20 | Major project |
| Yard work (raking, weeding) | $5-$10/hour | Beyond routine mowing |
| Babysit younger sibling | $5-$8/hour | For parental outings |
| Pet bathing/grooming | $5-$10 | Dogs, cats |
| Window cleaning | $1-$2/window | Interior and exterior |
Post available extra tasks on a family job board. Children choose which tasks to pursue. Payment occurs immediately upon satisfactory completion.
Allowance Distribution Structure
The three-category split:
When allowance is paid, immediately divide into three containers (jars, envelopes, or digital accounts):
| Category | Percentage | Purpose | Rule |
|---|---|---|---|
| Spend | 50% | Immediate wants | Can be used anytime |
| Save | 30% | Medium-term goals | No withdrawals until goal is reached |
| Give | 20% | Charitable giving | Donated monthly or quarterly |
For a $10 weekly allowance: $5 to Spend, $3 to Save, $2 to Give.
Physical vs. digital tracking:
| Age | Recommended System |
|---|---|
| 5-8 | Transparent jars (visual progress) |
| 9-12 | Jars or simple app with parental oversight |
| 13-17 | Bank account with app access; custodial investment account |
Worked Example: The Patel Family Allowance System
Family profile:
- Parents: Combined income $95,000 (Medium cost-of-living suburb)
- Child 1: Anika, age 8
- Child 2: Dev, age 12
Anika (Age 8) Program:
Total weekly amount: $8 (base $5 + potential extra $3)
Base allowance: $5/week (unconditional)
Three-jar split: $2.50 Spend / $1.50 Save / $1.00 Give
Expected chores (unpaid):
- Make bed daily
- Put dirty clothes in hamper
- Set table for dinner
- Feed family dog in morning
Failure to complete expected chores: Loss of 30 minutes screen time per missed task. No reduction in allowance.
Extra earning opportunities:
| Task | Payment |
|---|---|
| Help fold laundry | $1 |
| Wipe down bathroom sink and counter | $1.50 |
| Water outdoor plants | $1 |
| Organize toy shelf | $2 |
Maximum extra earnings: Approximately $5/week if all tasks completed.
Current savings goal: Stuffed animal collection piece, $18
Progress: $7.50 saved (5 weeks at $1.50/week). Remaining: 7 weeks at current rate, or 3 weeks if taking extra chores.
Dev (Age 12) Program:
Total weekly amount: $15 (base $8 + potential extra $7)
Base allowance: $8/week (unconditional)
Three-category split: $4 Spend / $2.40 Save / $1.60 Give
Expected chores (unpaid):
- Keep room clean (floor visible, bed made, desk organized)
- Empty all household trash cans weekly
- Load dishwasher after dinner (3 nights/week, rotating with parents)
- Vacuum common areas weekly
- Walk dog after school
Failure to complete expected chores: Loss of phone privileges for the day per missed task.
Extra earning opportunities:
| Task | Payment |
|---|---|
| Mow lawn | $10 |
| Wash car (full detail) | $15 |
| Deep clean bathroom | $7 |
| Organize pantry | $8 |
| Babysit Anika (2 hours) | $10 |
Maximum extra earnings: Approximately $20-$30/week depending on available tasks.
Current savings goals:
- Short-term: Video game, $60 (6 weeks at $2.40/week + extra earnings, achievable in 4 weeks)
- Long-term: New bike, $250 (targeting summer, 6 months away)
Give allocation: $1.60/week accumulates to $6.40/month, donated to local animal shelter quarterly ($19.20 per quarter)
Monthly family review:
First Sunday of each month, 15 minutes:
- Review savings progress for both children
- Discuss any adjustments to expected chores based on capability
- Post new extra earning opportunities for the month
- Celebrate goals reached or progress milestones
Annual review:
Each September (new school year):
- Increase allowances by $1-$2/week to match development
- Add age-appropriate expected chores
- Update savings goals for the year
- Review Give allocation and potentially select new charity
Risks, Limitations, and Tradeoffs
Risk 1: Withholding Allowance as Punishment
Using allowance reduction as discipline for unrelated misbehavior (backtalk, poor grades) undermines the financial education purpose of allowances.
Mitigation: Keep allowance separate from behavioral discipline. Use non-financial consequences for non-financial misbehavior. Only adjust allowance for financial irresponsibility (stealing, destroying purchased items).
Risk 2: Paying for Expected Contributions
If all chores are paid, children may refuse to help unless compensated, undermining the concept of family contribution.
Mitigation: Clearly separate expected (unpaid) contributions from extra (paid) opportunities. Expected chores are non-negotiable and carry non-financial consequences for non-completion.
Risk 3: Sibling Comparison and Conflict
Younger siblings may view older siblings' higher allowances as unfair.
Mitigation: Explain that allowances increase with age and responsibility. Older children also have more expected chores and manage larger expenses. When younger children reach the same age, they will receive the same amount.
Risk 4: Inconsistent Implementation
Parents may forget to pay allowance regularly or fail to enforce expected chores consistently.
Mitigation: Set a recurring phone reminder for allowance payment (same day, same time each week). Create a visible chore chart with daily checkboxes. If a payment is missed, make it up the following week rather than skipping.
Risk 5: Inflation of Payment for Extra Tasks
Children may attempt to negotiate higher payments or refuse tasks at posted rates.
Mitigation: Post rates in advance and do not negotiate. If a child declines a task at the posted rate, the task simply goes undone or is offered to another sibling. Rates may be reviewed annually, not in the moment.
Next Steps
-
Determine your family's allowance philosophy by discussing with your partner whether you prefer unconditional allowance, commission-based, or the hybrid approach
-
Calculate age-appropriate amounts for each child using the dollar-per-year formula ($0.50-$1.00 per year of age) adjusted for your region's cost of living
-
Create a list of expected chores for each child based on their age and capability, with clear non-financial consequences for non-completion
-
Establish a family job board listing extra earning opportunities and their payment rates; post in a visible location (refrigerator, family command center)
-
Set up the three-category system (Spend/Save/Give) with physical jars for children under 10 and a bank account or app for children 10 and older, with allowance distribution occurring at the same time each week