First Allowance: When and How to Start

Starting an allowance teaches kids money management before they face real financial decisions. Here’s your practical guide.

When to Start

Ages 5-6: Best starting age. Kids understand numbers and can make simple choices.
Too early (under 5): Money is abstract. Use play money first.
Not too late: By age 10-12, habits form. Earlier is better.

How Much?

Popular methods:

• $1 per year of age per week: 7-year-old gets $7/week
• $0.50 per year: More modest, $3.50/week for 7-year-old
• Based on your budget: What you can afford consistently

Start small. You can increase yearly.

Chores or Not?

Two philosophies:

Unconditional allowance: Teaches money management separate from work. Family contributions are expected regardless.

Chore-based: Connects work with earnings. Teaches effort = reward.

Hybrid (recommended): Base allowance for being part of family + extra money for extra chores.

Example: $5/week base + $1 for washing car, $2 for yard work.

The 3-Jar System

Teach budgeting from day one:

Save (30%): For bigger goals
Spend (50%): For wants
Share (20%): For charity/gifts

7-year-old with $7/week:

• Save: $2
• Spend: $3.50
• Share: $1.50

Rules to Set

1. Payment day: Every Sunday after dinner
2. No advances: Teaches delayed gratification
3. Their choices: Let them make mistakes
4. Review quarterly: Adjust amount as they age

What Allowance Should Cover

Ages 5-7: Toys, treats, small wants
Ages 8-10: + Birthday gifts for friends, some clothing choices
Ages 11-13: + Entertainment, hobby supplies
Teens: + Personal care, phone bills, gas

Teaching Moments

When they blow it all: “That’s frustrating. What will you do differently next week?”

When they save successfully: “You waited 6 weeks for that game. How do you feel?”

When they overspend: Natural consequences teach better than lectures.

Common Pitfalls

• Inconsistent payments (kills trust)
• Bailing them out (removes consequences)
• Controlling how they spend (prevents learning)
• Starting too complex (keep it simple)

Graduation Plan

As they prove responsibility:

• Age 8-10: Open savings account
• Age 11-13: Debit card for teens
• Age 14-16: Earning opportunities beyond allowance
• Age 16+: Part-time job, reduced allowance

Allowances aren’t about the money—they’re about practicing financial decisions while the stakes are low.