Personal Finance

How Much Are Chores Worth

By David Krug David Krug is the CEO & President of Bankovia. He's a lifelong expat who has lived in the Philippines, Mexico, Thailand, and Colombia. When he's not reading about cryptocurrencies, he's researching the latest personal finance software. 11 minute read

When it comes to allowance, there are two main philosophies. People’s willingness to pay kids to do housework is a divisive issue. Some relatives will argue that you shouldn’t compensate them for doing what they should be doing anyhow.

Every approach to giving kids money has its advantages and disadvantages. However, the end aim is to instill in your children the ability to responsibly handle money.

How Children Can Benefit from Allowance in Financial Education

Teens are of an age where they may start earning their own money and benefit from financial literacy classes offered at many high schools. However, a regular allowance is a great way to start young children out on the path to financial success.

Four out of five persons surveyed by the American Institute of CPAs in 2016 said they learned financial responsibility by getting an allowance.

Furthermore, a 2018 article in the Journal of Family Issues argues that parents are the primary teachers of financial literacy to their children. In particular, there are two methods in which children learn: through seeing and listening to their parents, and by direct instruction.

However, the report argues that most studies ignore one of the most effective methods of education: practical application. Activity-based learning is the most effective way to teach children.

And it’s crucial to provide children opportunities for practice at an early age, when the stakes are minimal. To gain insight into how they handle their earnings, it’s ideal to observe them while they’re still living at home with you.

In an article for PBS, Beth Kobliner, author of “Make Your Kid a Money Genius,” explains that children as young as three can grasp the fundamentals of money management. In addition, many children’s attitudes and behaviors around money have solidified by the age of seven.

This means that it’s best to introduce children to the concept of money and provide them opportunities to experience handling actual currency as early as possible. Thank goodness, these days, it’s less of a hassle than ever thanks to prepaid debit cards and kid-friendly smartphone apps.

Allowances of many kinds

Recognizing the need for an allowance is only half the battle. A number of choices are available.

Be as flexible as possible with your decision. Because children often surprise us with their reactions, you may find that you need to switch up the approach you use. It’s possible that you’ll learn that adjusting your strategy is necessary for the best outcomes.

However, everyone has to begin somewhere. Just pick the one that seems most reasonable to you.

  1. The Unconditional Grant

Giving a kid a certain amount of money on a regular basis without making them perform tasks in exchange for it is an example of a “unconditional allowance.”

That way, you can keep the education about money and the tasks about money separate. As an added bonus, youngsters can’t decide they don’t want to perform their tasks for the money and then refuse to do them. They come to understand that duties are necessary for a full existence.

Allowing your child to receive an allowance on a regular schedule (weekly, biweekly, or monthly) is a great approach to teach them the basics of financial management in preparation for the real world. The youngster may establish plans based on the amount of money they can reasonably anticipate to receive in the future, making it simpler to save for certain goals.

The negative of this approach is that it doesn’t show your youngster that money is earned through effort.

And if parents don’t supplement the allowance with financial instruction, youngsters may grow up clueless about how the world of finance works.

Unconditional stipend recipients have the lowest levels of financial knowledge, according to a survey conducted in 2008 by the student financial literacy nonprofit JumpStart Coalition. On the other hand, such need not be the situation.

Lewis Mandell, the study’s author and an economist, tells Insider that the only time allowances pay off is when they prompt discussions about money at home. Any strategy may be successful so long as you’re doing that.

  1. The Pay-as-You-Go Allowance

Children who are given an allowance on an as-needed basis do not get a regular sum of money. Instead, they go to their parents whenever they’re short on cash.

The kids haven’t done anything to deserve this money, which is a downside. In addition, if it depends on being diligent about keeping up with housework, the connection won’t be instantaneous or particularly robust.

Allowances are especially difficult for children to save because of their unpredictable nature. However, it requires regular conversations about finances, since you must weigh the pros and cons of every request individually.

In this ideal scenario, your child will ask you for money when they really want something like an e-reader, aquarium, or new bike but there isn’t a major holiday or birthday coming up to justify spending that much cash. You can then decide if your child has earned the money or what they can do to earn it.

In light of the aforementioned circumstances, you and your partner will have to give constant thought to financial management. Parents who believe their children should get financial support merely as members of the family may find this approach to be a good one.

  1. Earn-Money-for-Work Allowance

According to the 2019 T. Rowe Price Parents, Kids, & Money study, the most frequent sort of allowance is one in which children receive money for doing tasks.

With this system in place, the kids are expected to help out around the house in exchange for pocket money. Most of the time, students receive a weekly allowance in exchange for completing a set of duties.

The advantages include teaching the youngster that there is a clear connection between their efforts and the rewards they receive monetarily.

However, for this to work, parents need to maintain tabs on how often their child does and does not do their assigned duties. Even more so if there are a lot of kids running around.

A different option is to have a list of duties with a fixed fee for each one. You may set a minimum amount of tasks for your kid to do, or you can let them pick whatever they’re comfortable with. Complex jobs are compensated more handsomely than simple ones.
Do the task, or else your kid won’t get any pocket money.

  1. The Hybrid

Even if my own mother and father did not utilize it, the hybrid approach is becoming increasingly popular among parents. My six-year-old son helps out around the house by doing things like feeding the cat, tidying up his toys, and putting away his laundry without being asked to do so in exchange for any money.

He risks losing privileges like watching TV or going outside if he doesn’t complete these tasks. However, his allowance will not be cut. Just for being a family member, he is given a fixed monthly sum (not contingent on his completing any household duties).

If he takes on bigger jobs, he can get paid more. His pay is proportional to the degree of difficulty or length of time required for each assignment. Every time he takes on a bigger project, we have to have a conversation about finances.

Your child’s ability to complete larger jobs like raking leaves, shoveling snow, mowing the yard, and cleaning the house will vary with his or her age.

The justification for unconditional permission made this strategy appealing, so I proceeded with it. Both my husband and I perform our share of household chores, yet neither of us is compensated for our efforts. Simply said, we do these tasks because they must be done and because everyone must pitch in.

Nonetheless, I’ve always been an entrepreneur at heart. As of right now, I’m teaching part-time and writing professionally full-time. However, even as a youngster, I was always thinking of methods to get money.

First, I had to persuade my parents to allow me to clean their house instead of paying someone else to do it. I made an offer that was lower than what she charged but higher than my normal allowance. A few of their friends asked me to come clean their homes, and that’s how I expanded out. It was my own successful cleaning business, where I set my own hours and made far above the federal minimum wage.

I hope to instill an entrepreneurial spirit in my son. One approach to achieve it is with a hybrid model like this one, where his earnings potential is determined by the amount of work he accepts.

What is the going price?

Remember this basic rule of thumb before giving in to your child’s requests to “keep up with the Joneses” and give them an allowance that is far more than what their classmates get.
Depending on the individual’s age, a weekly payment of $1 to $2 may be required. The range of weekly earnings for a ten-year-old is $10–$20, while that of a fourteen-year-old is $14–$28.

Depending on the number of children you have, the size of your allowance budget, and the structure of your allowance system, you may choose if this amount is appropriate for your family.

You may, for instance, put a dollar amount on each chore. It’s possible to get paid one dollar for taking out the trash and two dollars for cleaning out the dishwasher.

Alternatively, evaluate the purpose of the permit. What exactly is it that you want your kid will take away from lessons on financial responsibility, for instance? The art of frugal living In such a case, you might want to offer them just a little less than what they’d need to buy their preferred items so that they can learn to save.

However, they may become disheartened if you provide them with too little. Find a way to educate them to wait for what they want while still emphasizing the importance of hard effort.
Determining the correct sum requires an understanding of your motivations.

What Happens to Money?

According to a 2019 study by the American Institute of CPAs, the median annual earnings of American children from allowances are $1,500, or $125 per month.

Only 3% of parents, though, indicated their children really put any of their allowance money away. Instead, they shell out the majority of their earnings on entertainment, such as games, electronic gadgets, and digital downloads, and time spent with friends.

Giving children pocket money isn’t a foolproof method of teaching them to be responsible. Few children can be trusted to make good financial decisions when they are on their own. We, as parents, have a responsibility to show kids how to cope.

Teach Children How to Spend Money

We should show our children the value of setting aside some of their earnings for future needs and goals, just as we do. Some of your allowance can be used right away, but you should also put some of it away for the future. Instilling in young people the value of saving for a rainy day is priceless.

Similarly, you may wish to suggest that kids set aside some of their money for philanthropic purposes. Having them pick the organization to donate to increases the likelihood that they will save enough for it.

If you want to teach your kids about budgeting and saving, try using the tried-and-true three-jar approach. Then, divide your cash into three huge containers, one for spending, one for saving, and one for giving.

Young adults, particularly those who are employed, might benefit from being encouraged to set aside a portion of their earnings for larger purchases like further education, transportation, and leisure.

Allow them to spend their money

Kids should be encouraged to spend their own money on a personal interest as a means of learning about and practicing financial responsibility.

My kid is a huge toy fan. It doesn’t matter if he uses his savings to buy a new Lego set or Batman action figure, as long as he is able to buy what he wants. Young people must be taught that effort is rewarded.

Managing one’s own finances is another duty that naturally rises along with advancing years.
Teens under the age of 18 may be expected to cover their own expenses when they go out to the movies or dine at restaurants with their friends, especially if they have a job such as mowing the lawn, raking leaves, or babysitting.

Teens who are a bit older might be expected to chip in for the family’s cell phone plan or cover the cost of their own gas.

Tracking Allowances and Chores

You may find a chore chart or cleaning schedule useful if you want to utilize chores as a means of tracking your children’s earnings. Numerous free charts, such as those available on, may be accessed online.

When keeping track of duties for many kids, they come in very helpful. Your own personal chart can be made if you so like.

Kids of all ages can benefit from the visual aid provided by a chart. Sticking a sticker on the chart to show that a child has finished a duty may be a rewarding experience for children of all ages.

If you pay for each chore, older children will have a clear idea of how much money they will earn over the course of the week or month.

If your allowance system involves deducting money from your child’s allowance for duties that were not completed or adding money for new chores, a chart might help you keep track of what you owe.

Today there are a plethora of kid-friendly financial management applications out there, perfect for keeping tabs on allowance or tracking kids’ tasks. If you’d rather keep tabs on their allowance online, they make that possible.

Children learn best from objects they can see and touch, such as paper money, but nowadays most transactions are conducted electronically and individuals rarely use actual currency. For this reason, I use the Rooster Money app on my phone to keep track of my son’s weekly pocket money.

Each week on Friday, it will increase his weekly total. Plus, I may subtract the cost of his purchases as they occur from his available funds. As an added bonus, he may use this system to organize his finances by creating savings, donation, and goal accounts.

In the premium edition, you may link the distribution of allowance to the completion of individual tasks. Tasks can be given monetary values. Plus, you may add money to your kid’s pot anytime the assignment is marked as accomplished, so long as you remember to do so.

Rooster Since there is no physical connection between money and a bank account, this money is just conceptual. However, it does provide a visual aid for helping youngsters keep tabs on their spending and savings. Another app with a similar function is called Bankaroo.

Besides this, there are applications like Greenlight, BusyKid, and GoHenry that link to your bank account or prepaid cards so that you can really use them to pay for things. These could be more suited for teenagers who need to get their hands on cash while mom and dad aren’t around.

Bottom Line

When it comes to deciding what sort of allowance is fair, there are a few distinct schools of thought. No matter how you decide to provide your children access to financial resources, regular conversations on financial responsibility are essential.

It’s easy to let the day-to-day shuffle distract us from thinking about how our choices will affect us in the future (or inaction). As parents, it is our responsibility to provide our offspring with the knowledge and abilities necessary to thrive in the adult world.

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