How Much Allowance Should You Pay Your Teenager?

How much allowance should I pay my teen?I bumped into an old friend this week at Starbucks, and he hit me with one of the all-time classic teen parenting questions:

Bill, how much allowance should I give my teenage son?

The short unhelpful answer: “it depends” — of course.

A longer, more helpful response? Here’s what I would suggest when it comes to allowance for a teen. (Note: I’m assuming it’s during the school year and your teen isn’t holding down an outside job. I’d recommend a job during the summer if possible and adjusting things accordingly):

  • Decide on the rough categories of things you want your teen to be in charge of buying — weekday lunches? clothing? entertainment? I’d try to keep it pretty simple. Don’t boil the ocean here. If you make it too complicated, you’ll struggle to consistently follow through.
  • Throw in a small amount for “random wants” — basically pocket change that your teen can blow on stupid stuff or, if motivated, squirrel away each week to save for that special item. Having to delay gratification and go through the extended act of saving is really key here. (See the famous marshmallow experiment.)
  • Have your teen propose a simple high level budget for the above. Review it together and revise until it’s acceptable.
  • Base your allowance amount on that budget.

The bottom line: comparing absolute allowance amounts with peers is pretty much meaningless. Families have wildly divergent expectations about what expenses their kids are responsible for covering and what constitutes a wise purchase given each family’s unique financial situation, money values, etc. That’s why I like the “budget-based-allowance” approach vs. the “but Johnny and Suzy get $X” whine-fest. Logical. Easy to explain. Easy to defend. Plus, when teens help come up with the budget, they feel ownership. They’re bought in. You’re virtually guaranteed to have less complaining and begging downstream in my experience.

Sometimes, it’s helpful to keep a few separate allowance buckets. For example, I had a separate use-it-or-lose it clothing allowance arrangement with my daughter. She couldn’t use clothing money for other stuff, but she could apply her entertainment budget to clothing if she wanted to. I also made her clothing allowance annual instead of monthly or weekly. I wanted her to wrestle with managing a large sum of money over an extended period of time. Experiment a bit, and try whatever tweaks make sense for your teens and family situation. Remember, you can always fine tune things over time, so don’t over analyze it.

Prom Can Take a Big Bite Out of That Clothing Budget!

Another thought: I’ve made several loans to the teens over the years for big ticket “needs” like a laptop. In the laptop case, the loan amount is for the delta between the most basic model and whatever fancy-pants, high end model they think they “absolutely must have.” I “garnish” their allowance to pay it back over a year or so. That way, they really appreciate how much those things cost as they see the payments going out each week and have to cut back on their other spending. The added bonus: they invariably take waaay better care of the things they buy that way. Again, it’s all about ownership and shared skin in the game.

Track Loan Repayments From Your Kids

A parting thought: for teens and college kids, prepaid cards are a really good option. I’ve been using prepaid cards with my 16 year old son for the last several months, and I’ve been very pleased with the results. There’s no worry about running up a debt like with a credit card. Prepaid cards are minimal hassle to get and low commitment relative to a full fledged checking account at a bank. All good things when it comes to dealing with the combustible mixture frontal-lobe challenged teens and money.

I’ll leave you with a list of teen prepaid cards to consider:


Rocky aka The Blog Post Author

Bill, I like how you attach your allowance plan to budget items, etc. I think it is also important to attach money to actual chores or contributing to life at home. When kids perceive an allowance as a handout or an entitlement, it sets them up for failure in the real world. Money is the result of work and effort. Thanks for this post!

Bill Dwight aka The Blog Post Author

Thanks for the thoughtful comment Rocky. I definitely like your quote "Money is the result of work and effort" - certainly an important message for kids. I tend to like hybrid virtual family bank setups like a combo of: (1) a budget-based allowance, (2) a set of basic expected chores with no pay and perhaps penalties for blowing them off (to send the message that all members of the family are expected to pull their own weight as a member of the household - no compensation required other than enjoying all the benefits of being a family member of course :-), and (3) a set of extra jobs-for-pay for significant tasks. I also love the idea of teen holding down summer jobs (or volunteer work).

MKI aka The Blog Post Author

A couple of very practical ways to help set up the accounts! Real life examples are great (girls clothing acct). Thanks for sharing!

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