FamilyA teen magazine caught my daughter’s eye in the store recently. She wanted it, but not enough to spend her allowance. This is exactly the decision-making we were hoping to inspire when we began giving her an allowance.

Many Michigan schools are incorporating financial literacy, and giving children an allowance is one way to extend the learning at home.

There are several ways to go about giving an allowance, some basic factors to consider when determining what is right for your family.

How old is your child and what is their maturity level?
These factors will help steer your decisions in determining the allowance system. You don’t want to make it so easy that your child takes an allowance for granted, but you want to set realistic expectations based on their age and maturity.

Visit a local library or bookstore with your child to help explain money management and the concept of receiving an allowance. “Michigan Jump $tart!” also has a website with activities to teach children of all ages about money management. “Money Smart Kids” offers fun games about financial literacy.

What purpose do you want the allowance to serve?
Is it to teach the value of money, be an incentive for chores, or simply provide some in-pocket cash? There is no right or wrong reason here, but having a clear concept of why you are giving it will help you plan. You should also explain to your child why they are getting an allowance and what you hope it will help them achieve.

Will the allowance be contingent on anything?
Some children need to complete all of their chores, meet behavior goals, earn certain grades, or meet other criteria in order to receive an allowance. In other families, the child receives it no matter what. Another option is to blend the two methods, so the child receives a small base allowance but has a list of “extra” chores he can choose to do for additional funds.

How will the money be administered?
Options include:

  • Handing out cash every Friday
  • Paying in a lump sum monthly
  • Putting the money directly in your child’s savings account
  • Adding the funds to a prepaid debit card
  • Holding onto the money and tracking your child’s credits and debits for her

Will there be restrictions on how the money is spent?
If your family has specific rules, such as forbidding toy guns or candy, make sure your child knows the rules still apply even if he has his own money. Some parents require their child to devote certain percentages of the allowance to charity or savings. Others give their child free reign on how it is spent.

What will they be expected to pay for out of their allowance?
Will your child be expected to use the allowance for lunches, clothing or school supplies? A popular option is to give older children and teens a budget and allow them to keep any excess funds. For example, they may receive $20 a week, which includes lunch money. However, they can choose to brown bag it to school and use the money in other ways. Or, you may prefer to buy all of your child’s necessities and give a small allowance to cover “wants.”

How much should you give?
Once you determine if your child will have to pay for certain items out of the allowance or not, you can determine how much to offer. There are many formulas used for this, such as a dollar a week per the child’s grade. This is a starting point, but only you can determine the right amount for your child based on all of the above considerations.

It’s important to allow some freedom in children’s spending, so they learn the value of money firsthand. I don’t always agree with how my daughter spends her money, but she’s learning to splurge on the items that make her happy and skip the ones she can do without—like teen celebrity magazines.

Rachael Moshman is a mom, freelance writer, educator and family advocate. Find her at


  1. A great article! We used to do allowance but they would try to get out of chores and still get paid. Now they just have assigned chores on a chart in the kitchen. I pay a little something for above and beyond, and our oldest gets 5 bucks to mow the back yard.

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