Giving Teens an Allowance – Money Management Tips for Parents

A parent asked me about giving her 13 year old teenager $50 a week for an allowance. Since I’m no expert on teens and money management, I asked the creator of KidsSave for her input. Here, Karyn Hodgens offers some practical tips on giving teens an allowance…

This was my reader’s question:

“I give my 13 year old $50 a week for allowance, and she wastes it on hair glitter, iPhone apps, and Uggs. We argue constantly about how she spends her money, and I’m sick of it! How can I stop her from blowing her money? How can I teach her about achieving money goals?” ~ Sherry, from California.

Below are Karyn’s money tips for parents, beginning with a suggestion that Sherry re-evaluate how much allowance she gives her teen. For more money tips for parents, read Allowance Magic: Turn Your Kids Into Money Wizards — it’s a step-by-step program for teaching money management to kids. Now, for Karyn’s advice…

Karyn, how much should a teen get for allowance? Is $50 a week too much?

Sherry might want to re-evaluate the amount of allowance given. Fifty dollars a week is a lot of money for a 13-year old, who’s probably giddy over having that much to spend! I think $13 a week is more reasonable ($1 for every year of age). It sounds like she’s already responsible for her discretionary spending even though her mom may take issue with some of the items. With a reduced allowance, her child will learn to prioritize – which is part of learning money management for teens.

She’s not going to be thrilled with the idea of a reduced allowance (!), so sit down and come up with a list of Above-and-Beyond jobs that she can do around the house to earn extra money. These can be things like washing the car, yard work, folding laundry, etc. Kids who earn their money tend to value it more, which means they are more careful with how they spend it.

The reduced allowance also makes teaching her how to set and acheive financial goals much easier. It’s hard to buy a pair of Uggs with an allowance of $13 a week. By the way, she should also be paying for part of that cell phone she buys all those apps for!

4 Tips for Giving Teens an Allowance – Money Management Tips for Parents

1. Remember that an allowance is a tool to help teen learn how to manage their money. A good time to start is around age 5 or 6. Start with a base allowance, not tied to chores, of half their age per week and increase that to their age per week by the time they are teens. Provide Above-and-Beyond jobs so teens can earn extra money.

2. Allow your teen to spend his money as he wishes – within reason. He’ll make financial mistakes along the way which become the perfect opportunities to teach him how to do it differently the next time. Eventually he’ll learn the benefits of being a wise consumer and the value of saving some of his money.

3. Do not give advances on allowance. When the money is gone, it’s gone. To manage their money successfully as adults, kids need to learn how to budget and live within their means. This may be the time to help them set up a personal financial goal. There will be time later to teach about loans and interest; kids need lots of hands-on experiences with money first.

4. An allowance stops when your teen has a regular paying job, usually around age 16 or 17. Teens this age like the independence a paycheck gives them. And if you follow the above steps, they’ll have the skills to be wise about what they do with that extra money.

If you have any thoughts or questions on giving your teen an allowance, please comment below…

Karyn Hodgens has a degree in child development and a multiple subjects teaching credential.  Her passion is educating parents on the importance of financial literacy for kids. She also contributed Money Saving Tips for Kids Going Back to School, here on Quips & Tips for Achieving Your Goals.

Are you interested in teaching your teen or child money management skills? Sign up for Hodgens’ next Beyond-the-Piggy-Bank 15-Day Challenge, which begins soon. She’ll send a regular email that describes an activity for parents to do with their kids.  By the end of the challenge, parents will have a foundation for teaching their kids about money.


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8 thoughts on “Giving Teens an Allowance – Money Management Tips for Parents”

  1. I agree, Janice, that life has a knack for throwing a lot of stuff at us. And, for the most part, I think we do a pretty good job of managing it all. Case in point, by giving your kids the responsibility of managing their own allowance, you’re teaching them the skills they will need to manage money effectively on their own one day.

    As far as the bath and beauty products, I would absolutely have those included as a part of their allowance…for several reasons.

    First, they’re old enough to be taking on more responsibility. Adding these items to their budgets is getting ever so close to the real thing…and they need the experience.

    Second, it’ll help them develop savvy shopper skills as they look for coupons, sales, etc.

    And, third, it’s one less thing YOU need to take care of! You’ve been there for 18 years, time to start adding in a little more “me” time. :-)

  2. I have been giving my kids allowance now they are both 18 going to school and working part time.

    In addition I am paying for a bus monthly bus pass, 50 cell phone minutes, and hair cuts. Wondering about the bath and beauty products that they seem to go through so quickly. Would it be wise to tell them to take those items out of the allowance or would that be something that comes under the food and drug store category for me? Have trouble with the allowance and categories this should include.

    Silly really that I cannot seem to figure this out after all that life has thrown at me in the last 18 years!

  3. Starting is young is certainly one of the best things I have done with my three children. I do believe that if we were given the same advice my financial career would have been a lot healthier than it was when I first started out. Teaching your children to respect and care for money is very important.

  4. You’re absolutely right, Laurie. Just like our “regular” personalities, we all have “money” personalities. Partly a packaged deal when we’re born and partly influenced by our environment, some need to work a little harder at at things like saving and making wise investments.

    But, unlike our regular personalities, as a society we don’t give much thought to our money personalities (savers, spenders, givers, penny pinchers, avoiders, worriers), which, if not recognized and “tamed” in time, could lead to problems.

    The interesting thing is, if you’re paying attention, it’s easy to see these personalities start to come out in kids. The good news is, there are strategies that can be used to help steer kids in the direction of making good money choices. And, like most things, the earlier you start, the easier it is.

  5. Laurie Pawlik-Kienlen

    My grandma (who partly raised me) gave me $25 a week for an allowance, when I was 15. It seemed like a vast amount of wealth! I couldn’t believe it — and I couldn’t spend it all before the next Friday and “allowance day” rolled around!

    Do you think some people are born with inherent money skills, and others need to be taught how to handle their money? I’ve always been a saver and wise investor, but don’t remember being taught it….my grandma just gave me my allowance, and I always tucked it into my savings account!

    My sister, on the other hand, spent her money like tomorrow would never come…
    .-= Laurie Pawlik-Kienlen´s last blog post …Pay Off Your Mortgage – 5 Ways to Make Mortgage Payments Go Away =-.

  6. Thanks, Susan and NetSpend!

    Yes, laying that financial foundation early is important. We want our kids to be prepared to handle the adult financial decisions they will be faced with on a daily basis.

    Thanks for chiming in!


  7. Really great post – when it comes to teaching kids personal finance, the sooner the better. Another great way to do it is with prepaid cards. You can load the allowance on them and they can spend it freely, but will have to start understanding that when the money is gone, it’s gone. Also, online statements can be really helpful for your kid to see how to better manage funds.
    .-= NetSpend´s last blog post blog ..Set a Budget by using a NetSpend Prepaid Credit Card =-.

  8. Dang!
    Sounds like I’m too old to get an allowance.

    Seriously, great tips. Like the the idea of starting them at age 5 or 6, and making it half their age. And, good to know about the teen getting the job and making their own money. This good parenting will definitely prepare a future adult to properly manage their money.
    .-= Susan Liddy´s last blog post blog ..SURVEY! What do you have to smile about today? =-.