Kids’ Allowances: What Rules and How Much to Pay?

Some interesting allowance statistics:

While these general guidelines are helpful, most parents still have lots of questions about allowances. Of course, there’s no single, “right” way to structure your child’s allowance. However, these tips might help you decide what works best for your family:

When should I start giving my kid an allowance?

Most parents start around age 8, according to a T.Rowe Price survey. This is a good rule-of-thumb age. One tip: If your child mixes in cash and coins with her toys or routinely leaves money sitting around the house, she’s not yet ready for an allowance.

How often should I give it?

Weekly for younger kids and allowance beginners. They’ll have trouble making their money last much longer than seven days. Switch to giving your kids a monthly allowance when they’re about 11. This requires them to budget their money over a longer amount of time.

How much should I pay?

Although the current U.S. average is $67.80/month, that’s for kids of all ages. Your mileage may vary. For instance, you may want to pay a dollar or so per year of a child’s age, and give raises at every birthday. By high school, you might prefer to give your teen enough money to cover his own costs for clothing, personal supplies, bus, etc. You can base the amount on how much money you think is reasonable for your child to spend, rather than just his or her age.

Should I tie allowance to chores or grades?

There are different schools of thought on this.

  • Tie to chores, yes: Some parents advocate paying kids “commissions” so money remains connected to working hard.
  • Tie to chores, no: Kids could decide to skip chores if they don’t need money.
  • Pay for grades, yes: This practice can teach kids that good work leads to rewards.
  • Pay for grades, no: It could take away their sense of pride, or be tricky for kids who truly struggle academically.

Should saving and/or donating be part of the allowance picture?

Most experts say definitely yes on this point. Give kids jars, envelope, segmented piggy banks or help them set up digital budget categories for Spend, Donate and Save. Older kids might also need bank accounts or digital categories for saving larger amounts of money—for a car, college, etc. Your goal is simply to help your kids see that money is never just for spending.

(photo courtesy © James Thompson cc2.0)

Spotlight Story: William B.

Every kid has a dream car, but how many end up owning it? We know one Greenlight driver who worked hard, saved up and bought his dream car at the age of 16. 

Today’s Spotlight Story takes us on William B’s financial journey, from “Dad, can I have…?” to a part-time job that will eventually pay off his Mustang. If you’ve got a story about your kids doing big things with their cha-ching, reach out with a direct message on Instagram or Facebook, or email us at social@greenlightcard.com.

Meet William 

William, September Spotlight Story, driving the mustang he bought with his own money

William is a junior in high school who plays soccer, hangs out with friends and does normal high school things. But what most people don’t know about him is he’s a money managing machine. 

That’s because William made a big goal for himself: He wanted to buy a car. Before coming up with this goal, he didn’t have a ton of experience handling money on his own. When he needed to buy something, he’d ask his parents for some cash or he’d mow the lawn on a Saturday to earn a quick allowance. But that quickly changed when he set a savings goal for a sporty white 2016 Mustang in his Greenlight app

How William got started  

We’re going way back to William’s first concept of money: “Dad, can I buy that?” To help William learn more about money, his parents looked for something that could make budgeting fun and easy — and something that could do the work for them. They found Greenlight, got William a custom card and the rest is history. 

To start saving for his future car, he set a savings goal to reach $1,000. After getting a part-time job at the local Walmart as a personal shopper, he reached his goal pretty quickly. Plus, his dad promised to match him dollar-for-dollar to reward his hard work. (Psst, this really works. Dollar matching or setting Parent-Paid Interest encourages your kids to keep up the good work!)

Bold fact about William: As a personal shopper, William can pick 178 items per hour.

Being a personal shopper means being quick on your feet! For William, it means picking 178 items an hour and then hand-delivering them to customers who are waiting outside. This was particularly helpful for shoppers who wanted to be safe and distanced in the pandemic. 

Advice from September Spotlight Story, William: Don't let your goals out of sight.

William’s advice goes for all ages (parents included). His two cents: Set a goal, work hard for it and don’t let it out of sight. $1,000 may seem like a lot — especially for a student — but when you chip away at your goal and keep your eyes on the prize, it’s a lot more doable. 

What’s next? 

Now that the ‘stang is in his hands (er, driveway?), William is tackling his monthly car payment using his Greenlight card and hard-earned money skills. Next on his list of savings goals? He wants to blackout the rims of his sporty ride. Kudos, William!

Greenlight announces Series C fundraising to help millions more parents raise financially-smart kids

With more than 2 million parents and kids by our side, today we announced our Series C fundraise and a shiny new valuation.

We’re grateful for the families and investors who have helped us reach this point, and we’re beyond excited to continue to grow. Full press release is below.

Greenlight Raises $215 Million at a $1.2 Billion Valuation To Help Millions More Parents Raise Financially-Smart Kids

ATLANTA, (September 24, 2020) – Greenlight® Financial Technology, Inc. (“Greenlight”), the fintech company on a mission to help parents raise financially-smart kids, announced today a valuation above $1.2 billion after raising $215 million in Series C funding. The series was led by Canapi Ventures and TTV Capital with participation from new investors BOND, DST Global, Goodwater Capital and Fin VC along with Greenlight’s first institutional investor Relay Ventures. 

Since launching its debit card for kids in 2017, Greenlight has experienced explosive growth. The company now serves more than 2 million parents and kids, helping them manage their family finances and navigate the world of money together. To-date, Greenlight kids have collectively saved more than $50 million.

“Greenlight’s rapid growth is a testament to the value they bring to millions of parents and kids every day. My wife and I trust Greenlight to give us the modern tools to teach our children how to manage money,” said Gardiner Garrard, Founding Partner at TTV Capital. “TTV Capital is thrilled to provide continued investment to help the company empower more parents.”

Greenlight is the comprehensive, all-in-one money management platform purpose-built for families. Its parent-managed debit card for kids with companion apps give parents the ability to pay allowance, manage chores and set flexible, store-level spend controls. Kids explore lessons in earning, saving, spending and giving with a debit card and app designed just for them. 

“Greenlight’s purpose-based mission of bringing financial literacy to families is massively impactful.” said Neil Underwood, partner and co-founder of Canapi Ventures, “We’re super excited to back this amazing leadership team who is introducing financial services to an entirely new demographic.”

“Greenlight’s smart debit card is transforming the way parents teach their kids about responsible money management and financial literacy,” said Noah Knauf, general partner at BOND. “Having achieved phenomenal growth year-over-year, this is a company on the fast-track to becoming a household name. We look forward to working alongside the Greenlight team to support their continued growth.”

The Series C funding will accelerate Greenlight’s mission, propelling the company to reach more families and provide them with new ways for kids to learn about the world of money. In the coming months, Greenlight families can look forward to a completely reimagined app and new investing tools made for kids.

“We’re honored to partner with both new and existing investors for our Series C round to continue inspiring future generations to be financially happy and healthy,” said Johnson Cook, President and Co-Founder of Greenlight. 

“Our vision is to help all families worldwide to be smart about personal finance, providing innovative ways for kids to learn, so that every child can reach their full potential. We look forward to continuing to grow with our families.” said Tim Sheehan, CEO and Co-Founder of Greenlight.

For more information on Greenlight, please visit greenlightcard.com, or follow Greenlight on Facebook and Instagram.

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About Greenlight:

Founded in 2014, Greenlight Financial Technology is an Atlanta-based fintech company that’s committed to empowering parents to raise financially-smart kids. Its groundbreaking family finance product, Greenlight®, is a debit card for kids that parents manage by app using flexible parental controls. Patent-pending technology enables parents to choose the exact stores where their children can spend, manage chores, set parent-paid interest rates on savings and more. Kids monitor spending, watch their savings grow and learn to make real world trade-off decisions.

The Greenlight Card is issued by Community Federal Savings Bank, member FDIC, pursuant to license by Mastercard International. For more information, please visit: www.greenlightcard.com