Allowance basics for parents and kids

October 06, 2022

For many kids, allowance is the first lesson in personal money management. Here are some best practices your children can follow for future saving and spending.

 

Children can actually grasp basic money concepts (e.g. coin names) around age 3. And a simple tool that can help further teach financial education and responsibilities is allowance. According to a survey by the American Institute of Certified Public Accounts (AICPA), 68 percent of parents give their kids an allowance. And most adults, a whopping 81 percent, say allowance teaches children financial responsibility.

 

When and how much?

A general suggestion is to start in kindergarten or first grade, giving $1 for each year of the child’s age. So, for example, a 6-year-old could get $6 per week. This can be an easy way to keep things fair in households with multiple kids. Ultimately, the allowance start date, amount and frequency is up to your family.

 

Teaching the one-third rule

This popular method splits allowance into equal portions for saving, spending and giving. For kids who love to play and build things, an easy way to learn is with separate piggy banks or jars. Label them save, spend and give, and this simple money management technique will become ingrained.

As the savings jar fills up, take your kids to the bank and open a savings account. This is especially important as they get older. It can give you the chance to talk about bigger money topics, such as interest and long-term goals. Savings accounts are also easier for parents to transfer money should you need to in the future. Plus, your financial institution might even offer candy or other freebies to reinforce this positive, fun experience.

If your children have outgrown piggy banks, apps like FamZoo and Goalsetter can digitize the allowance and management experience, while teaching kids about financial education.

Charitable giving at a young age can help instill the value of helping others. Encourage your kids to find a cause they care about. Some kid-friendly ideas? Donating to a local animal shelter or an environmental organization.

 

Make saving a habit

Saving money is a long-term skill. Learning it early through allowance can help set the stage for financial success in adulthood. Start off by letting your child set their own goals – but guide them. Teach them how skipping short-term wants can help reach long-term goals.

Also, ask them to write their goals down. Tracking their progress can be an easy visual reminder of how far they’ve come or how far they need to go. And, let them learn from mistakes. If they spend all their allowance, try not to provide more money before the next allowance period. It’s important to experience that when money runs out, it runs out.

Lastly, lead by example and save money yourself. Use your own jar system to show how you implement smart money habits. Reiterate the message that every time you get paid, you save a portion of your check to prepare for the future.

 

Do your children receive an allowance? Open a U.S. Bank savings account for them today.

Related content

Don’t underestimate the importance of balancing your checking account

Multiple accounts can make it easier to follow a monthly budget

A who’s who at your local bank

P2P payments make it easier to split the tab

Financial goals for 2024 a 12-month planning guide

How to sell and buy a home at the same time

Your 4-step guide to financial planning

How does money influence your planning?

Loud budgeting explained: Amplify your money talk

LGBTQ+ financial planning tips

Should I itemize my taxes?

Lost job finance tips: What to do when you lose your job

Short- and Long-Term Financial Goals for Every Life Stage

How to request a credit limit increase

How your taxes can change after a major life event

Make holiday gift giving easier in a digital world

Working with an accountability partner can help you reach your goals

What to do with your tax refund or bonus

3 financial tools to help automate your finances

Get back on track with your New Year’s financial resolutions

How to increase your savings

How to Adult: 5 ways to track your spending

How compound interest works

5 tips for parents opening a bank account for kids

How to save more money in 2024

How I saved $10,000 in just one year

Live your money values in 2024

Tips on how couples can learn to agree about money

How to financially prepare for pet costs

What is a Certificate of Deposit? And what to know before opening an account

How to set financial goals you will keep

How to Adult: 7 tax terms and concepts you should know

When your spouse has passed away: A three-month financial checklist

What documents do you need after a loved one dies?

How to plan and save for adoption and in vitro fertility treatment costs

Webinar: Uncover the cost: Starting a family

3 tips for saving money when moving to a new home

5 ways to maximize your garage sale profits 

Building confidence in your finances and career

Pros and cons of a personal line credit

Tips for handling rising costs from an Operation HOPE Financial Wellbeing coach

Mindset Matters: How to practice mindful spending

Mobile banking tips for smarter and safer online banking

Uncover the cost: International trip

Uncover the cost: Wedding

How to save for a dream vacation

Discovering your money personality can help you save

Does your side business need a separate bank account?

Managing your finances in the military

How to save money while helping the environment

Planning self-care moments that matter (and how to finance them)

Is raising backyard chickens a good idea financially?

By the numbers: The gig economy

5 things to deinfluence in your finances

7 steps to prepare for the high cost of child care

How to decide when to shop local and when to shop online

5 myths about emergency funds

How to save for a wedding

What does FDIC mean?  

An eco friendly debit card with roots in Haiti

Stay on budget — and on the go — with a mobile banking app

5 things to consider when deciding to take an unplanned trip

Stay committed to your goals by creating positive habits

How new parents can prepare for the costs of a new child

Tips for talking about money when friends earn more

5 tips for creating (and sticking to) a holiday budget

Money Moments: 3 tips for planning an extended leave of absence

The banking app you need as a new parent

How can I help my student manage money?

Bank from home with these digital features

How I did it: Transitioned from the military to a private sector career

6 questions students should ask about checking accounts

What you need to know as the executor of an estate

What applying for store credit card on impulse could mean

How to manage money in the military: A veteran weighs in

First-time homebuyer’s guide to getting a mortgage

Overcoming high interest rates: Getting your homeownership goals back on track

Travel for less: Smart (not cheap) ways to spend less on your next trip

Things to know about the Servicemembers Civil Relief Act

Should you buy now, pay later?

Steer clear of overdrafts to your checking account

U.S. Bank asks: Do you know what an overdraft is?

Tips and resources to help in the aftermath of a natural disaster

Tips for working in the gig economy

Which is better: Combining bank accounts before marriage — or after?

Tips to overcome three common savings hurdles

Money Moments: 8 dos and don’ts for saving money in your 30s

Save time and money with automatic bill pay

A passion for fashion: How this student works the gig economy

Helpful tips for safe and smart charitable giving

Money Moments: 3 smart financial strategies when caring for aging parents

Growing your savings by going on a ‘money hunt’

Why a mobile banking app is a ‘must have’ for your next vacation

Tips to raise financially healthy kids at every age

Is it time to get a shared bank account with your partner?

How I kicked my online shopping habit and got my spending under control

How to financially prepare for a military PCS

Friction: How it can help achieve money goals

It's possible: 7 tips for breaking the spending cycle

Earning in the gig economy: Gladys shares her story

Financial checklist: Preparing for military deployment

Here’s how to create a budget for yourself

Common unexpected expenses and three ways to pay for them

Webinar: Common budget mistakes (and how to avoid them)

Checking and savings smarts: Make your accounts work harder for you

Are savings bonds still a thing?

3 awkward situations Zelle can help avoid

Allowance basics for parents and kids

9 simple ways to save

Do you and your fiancé have compatible financial goals?

3 ways to keep costs down at the grocery store (and make meal planning fun)

What military service taught me about money management

College budgeting: When to save and splurge

Overdrafts happen: Steps to get you back on track

Adulting 101: How to make a budget plan

You can take these 18 budgeting tips straight to the bank

How I did it: Learned to budget as a single mom

Personal loans first-timer's guide: 7 questions to ask

Dear Money Mentor: How do I set and track financial goals?

Understanding guardianship and power of attorney in banking

What I learned from my mom about money

Military finance: How to create a family budget after military service

6 ways to spring clean your finances and save money year-round

Managing money as a military spouse during deployment

How to cut mindless spending: real tips from real people

Real world advice: How parents are teaching their kids about money

What financial advice would you give your younger self?

Essential financial resources and protections for military families

How to stop living paycheck to paycheck post-pay increase

Practical money tips we've learned from our dads

What you need to know about renting

What’s in your emergency fund?

Certificates of deposit: How they work to grow your money

Dear Money Mentor: How do I pick a savings or checking account?

How and when to ask for a raise

Money management guide to financial independence

Money Moments: How to manage your finances after a divorce

Personal finance for teens can empower your child

5 reasons why couples may have separate bank accounts

U.S. Bank asks: Transitioning out of college life? What’s next?

5 tips to use your credit card wisely and steer clear of debt

What’s your financial IQ? Game-night edition

How having savings gives you peace of mind

30-day adulting challenge: Financial wellness tasks to complete in a month

First-timer’s guide to savings account alternatives

Does your savings plan match your lifestyle?

3 tips for saving money easily

Four ways to make a strong resume for your first real job

Myths vs. facts about savings account interest rates

U.S. Bank asks: Do you know your finances?

Booming in the gig economy: A new chapter leveraging 45 years of experience

Your guide to starting a job: Resources to help along the way

7 financial questions to consider when changing jobs

Webinar: 5 myths about emergency funds

How to best handle unexpected expenses

Start of disclosure content

Loan approval is subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rate and program terms are subject to change without notice. Mortgage, Home Equity and Credit products are offered through U.S. Bank National Association. Deposit products are offered through U.S. Bank National Association. Member FDIC.