Allowance: When? How much? What for?

To give or not to give allowance, that is the question (and sometimes a controversial question at that). As piggy banks become obsolete and the need for physical cash dwindles in today’s fast-paced society, one thing hasn’t changed: the call of a child saying, “Hey Mom, I need money.” Whether parenting a 7-year-old or a 16-year-old, chances are pretty high that the A word (yes, allowance) is going to come up.

According to a T. Rowe Price survey, 51% of parents give their kids allowance. While the decision about whether or not to give allowances, the frequency of giving allowance and the amount of money that a child should receive for allowance can be highly personal to each family. 54% of parents who give allowance firmly believe it should be earned. 

Greenlight mom Maggy Parker shared, “I have always viewed allowance as a right of passage for my children. When the kids are old enough to take on regular responsibilities around the house, they are old enough to earn an allowance for their contribution.”

With age comes wisdom (and more allowance money) 

One of the most frequently asked questions about allowance focuses on what age is the best to start handing over money. While there are no official rules when it comes to allowance and each family is different, age 8 is the reported national average.  

Here’s a breakdown of what Greenlight kids average each week (ages 8-18): 

“I set my child’s weekly allowance after researching what the national average for allowance was and then cushioned it by a few dollars to ensure I was giving my son a little extra for his needs now that he’s driving,” said Greenlight mom Eliza Newell. 

Cha-ching, cha-chores! 

According to the most recent survey from the American Institute of Certified Public Accountants, four in five parents who give allowance expect their kids to work for money. and their kids average about five hours a week of household chores. 

With the majority of parents expect their kids to earn allowance, chores often factor in as a stairway to an allowance pay out — however, this can look different for different families. 

Some families expect a completed chore list for an allowance pay out. If the lawn isn’t raked, the Lego’s aren’t put away, the bathroom trash isn’t taken out and the reading log for the week isn’t filled out, no allowance gets paid. 

Other families assign specific dollar amounts to chores, so if the child only completes five of their eight chores for the week – they don’t get the total allowance amount, just what each task equaled. 

Greenlight dad Allen Anderson shared that he gives his daughter a baseline allowance every week, but he gives her the opportunity to earn more on a weekly basis by doing more chores. 

Allowance leads to smart habits

Greenlight kids who receive allowance save 26% more and donate 37% more money than those who don’t. This suggests that allowance, paired with parental guidance, leads to healthy financial habits.

Payouts made easy

When it comes to paying out allowance, it shouldn’t be complicated. Since remembering to get cash back at the grocery store or finding an ATM is a hassle, Greenlight has made it easier on parents by offering an auto-funding option.

Parents can set weekly or monthly allowance payments tied to chores within the Greenlight app, so funds can be easily distributed. 

To encourage good habits, parents can also allocate those allowances to their kids’ Spend, Save and Give accounts. 

Try Greenlight now

Sign up your family for Greenlight today! 

New Year Resolutions & Bright Futures

Studies have shown that financial health is strongly connected to physical and mental wellness. There’s no better time than now to start routines that set your kids up for financially-healthy and happy futures. Let Greenlight help you set new year resolutions that you’ll actually keep to jumpstart your progress.

Resolution #1: We all need a bit of balance (tracking)

Our goal at Greenlight is to make sure all kids are empowered to make financially-smart decisions. We think empowerment starts with knowledge — working with kids to make sure they understand how much they earn, how much they spend and how they should save. 

Tip #1 is all about making sure kids take the time regularly (dare we say it, daily?!) to track their spend history and account balances. This new year resolution will naturally spark conversations around trade-off decisions, teaching your kids responsibility in budget management.

Within the Greenlight app, kids are able to monitor their spending, earning, saving, and giving history. This allows kids (and parents!) to track:

  • How much to expect in allowance
  • How much is available to spend
  • Progress toward their saving goals

“I have two teens (13 & 14). Being able to see their spending and balances digitally via the app has made them much more mindful of how and when they choose to spend their money.”

Antoinette K, Greenlight mom

Resolution #2: Save! Save! Save!

We know it’s hard for kids (especially the young ones!) to understand the difference between wants and needs. Starting kids out with a savings account early can teach them to save for what they want and be prepared to cover what they need because unexpected things happen. 

Consider mapping out a monthly plan with your kids to help them articulate, save for and reach their goals. 

The most popular saving goal for Greenlight kids in 2019 was a car!

If your kids earn an allowance based on grades or chore completion, write out how much each grade or task is worth. That will help them calculate what they need to do to accomplish their goals.

Parents are also able to help their kids reach their goals by setting aside a portion of allowances into their child’s Greenlight save account, helping reinforce wise saving habits.

Setting up saving goals within the Greenlight app helps kids visualize what they’re saving for and regularly track their progress.

Greenlight kids who create saving goals save 29% more than kids who don’t.

Once a week, consider having a family meeting to talk about how close your kids are to reaching their goal. Reviewing their spend history can help kids rethink a plan for the next week on how to spend less and save more. This regular routine can turn into a long-term habit that magically reduces the number of times you get asked for money.

Resolution #3: Watch savings grow with Parent-Paid Interest

After you get your family into the habit of saving, it’s time to learn about how to make your savings grow. Greenlight helps teach the power of compound interest by offering parents the ability to pay a parent-paid interest rate on top of their child’s savings.

On average, Greenlight families set a parent-paid interest rate of 18%. 

Once your kids understand the concept of compound interest, you can set your parent-paid interest rate to a more realistic one and have conversations around what grownup savings accounts typically earn.

Resolution #4: Have you done your chores?

Chore routines can be a great way to show your kids that money has to be earned. A recent poll of Greenlight parents showed that 73% give allowance, and 47% say their kids have to earn it. 

Use the beginning of the year to reassess your family’s chore routine. With age may come new responsibilities, changing the chores typically assigned to your kids.

However, if ever, you choose to reward your kids for chores, Greenlight can help with task management. With the Greenlight app, you can set one-time or weekly chores based on the routines you set for your family. 

In 2019, Greenlight helped kids finish 1.8 million chores!

Parent reviews all chores in one view within the Greenlight app.

If your child does dishes weekly, Greenlight allows parents to assign tasks and regular deadlines. If your child contributes to other household responsibilities by cleaning the gutters once a month, one-time chores may be assigned with an optional monetary reward upon completion.

Whatever your goals, Greenlight is here for you.

Greenlight is here to help your family feel empowered to talk about money and form smart habits with all the tools to raise financially-smart kids. Not a Greenlight member? Sign up today!

Greenlight’s 2019 Year in Review

You did it. You celebrated the birthdays, packed lunches for soccer tournaments and survived the endless conversation about Minecraft. Congratulations, Moms and Dads — you’ve made it through 2019. 

As we look toward 2020, allow us to celebrate the unsung heroes of financial literacy – YOU! The hundreds of thousands of Greenlight parents teaching their kids the value of a dollar and the art of making smart trade-off decisions.

In 2019, Greenlight kids did 1.8 million chores and collectively managed more than $150 million. But that’s not all.

Greenlight's 2019 Year in Review infographic. 
Kids managed $150+ million in 2019.
They set aside $2.6 million to give and did 1.8 million chores.
On average, they spend $91 per month, and 30% of what they spent went toward food and grocery.

Looking toward 2020

In 2020, we’ve got big plans to improve the Greenlight app and add more features for your kids to learn the full-spectrum of money management.

We’ll be weaving more educational layers into the Greenlight app, making it fun (and painless!) for kids to build smart earning, spending, saving and giving habits.

Our team is also building tools for kids to learn all about the world of investing, with a new suite of features that allow kids to invest in multiple funds and even buy fractional shares from their favorite companies.

Our single most important job is to support you – the parents doing the hard work. Together, let’s make 2020 the Year of Financial Literacy.

*Data captured from Greenlight families based on activity from Dec 2018 to Nov 2019. Average monthly spend calculated only for kids who spent.