How Much is the Right Amount of Allowance for Your Children?
One of the most common questions I get from parents is: How much should I be giving my kids as their allowance? It’s a valid and important question, and it often comes with a mix of emotions—guilt, worry and uncertainty.
And always it is rooted in love as it is parents to want to instil good money habits in their kids that ask this question!
And there’s that word again: should.
So how do I answer? If you’ve been following me you probably expect already it’s not a direct answer!
It’s not about what you should do but what works for your family. It’s a balance between the reality of your life, the values you want to instil in your children and what you can actually afford.
Let’s break it down.
Step 1: Start from the Bottom Up
When deciding on an allowance, I recommend taking the same approach I use when helping families create their Cash Flow Plan (budget). Start by looking at your child’s lifestyle.
What does socialising look like for them?
What does their social circle typically do, and what does that cost?
For instance, if your 13-year-old’s friends like to grab snacks after school twice a week or go to the cinema monthly, you can estimate what their share of those activities might cost. On the other hand, if your young adult is at university and needs to cover basic groceries, transportation and some entertainment, that will be a different calculation entirely.
Once you’ve identified their baseline needs, it’s important to decide how much you want to facilitate and encourage. For example:
Do you want to support their social activities fully, or do you want them to contribute through part-time work?
Are there activities you’d prefer they avoid, and how can the allowance reflect that?
Finally, add a small buffer for surprises or indulgences. Life is unpredictable, even for kids, and flexibility allows them to learn how to manage unexpected expenses.
Step 2: Balance Reality and Responsibility
Once you’ve calculated this number, it’s time to reflect. Ask yourself:
Does this amount feel reasonable, or does it seem like too much or too little?
Can I comfortably afford this without straining my family’s finances?
What is having this amount of money going to teach my children about money?
For example, if you live in an area where teens often eat at trendy cafés or shop for branded clothing, the allowance may need to reflect those societal norms. But it’s equally important to set boundaries.
Example:
A parent in a high-cost area might decide to give their 15-year-old AED 200 per week. This could cover café trips with friends and save a bit for personal purchases. This parent knows that to encourage bonding with this friends, this is what is needed in the circle they are in. However, the parent also explains that branded clothing or extra outings need to come from savings or part-time work.
Step 3: Communicate Clearly with Your Children
Whatever amount you decide on, the most critical step is sitting down with your kids to discuss it. This conversation should cover:
The Purpose of the Allowance: Explain why you’re giving them this money and what it’s intended for. For example, “This is to cover your social activities and snacks with friends. It’s not meant for larger expenses like new clothes, which we’ll handle separately.”
Expectations and Boundaries: Be clear about what happens if they overspend or run out of money before the next allowance. Will they get an advance? Or will they have to wait and learn to budget better next time?
Expenses You Cover: Clarify what you’ll pay for versus what they’re responsible for. For instance, a teen might use their allowance for entertainment and friends gifts, but school supplies and clothing remain your responsibility.
Example:
Imagine you give your 12-year-old AED 50 per week. You explain that it’s for snacks at school and outings with friends. If they spend it all on one expensive treat, they’ll need to wait until next week. You also let them know that school stationery is still covered by you.
Step 4: Adjust Over Time
Allowance isn’t a one-size-fits-all number. It will evolve as your child grows, their needs change, and your financial situation shifts.
For younger children, smaller weekly allowances are often enough to teach basic money management. For teens or young adults, a monthly allowance may be better for instilling long-term budgeting skills.
For instance, your university-aged child might receive AED 2,000 per month to cover transportation, groceries, and a portion of their rent. At this stage, it’s essential to have a detailed conversation about prioritising needs versus wants.
Step 5: Teach Financial Responsibility
Allowance is more than just handing over money—it’s a teaching tool. Use it to introduce financial concepts like:
Budgeting: Encourage them to divide their allowance into categories, such as saving, spending, and giving.
Saving for Goals: Teach them to set aside money for larger purchases, like a gaming console or a concert ticket.
Making Choices: Allow them to face the natural consequences of overspending in a safe environment.
For example, if your 14-year-old spends their weekly AED 150 on snacks and toys by Tuesday, let them experience the discomfort of running out of money. This builds financial resilience and accountability.
Your Unique Balance
The “right” allowance will look different for every family. It depends on your child’s age, lifestyle, your financial capacity, and the values you want to instil. Ultimately, it’s about finding a balance that feels good for your family.
By approaching the decision with care and open communication, you’ll set the stage for your children to learn lifelong financial skills.
Let’s Talk About Allowance
How have you determined the amount of allowance for your children? I’d love to hear your approach—share your thoughts in the comments below!
If you’re unsure where to start or want personalised guidance, schedule a consultation with me. Together, we can create a money management plan tailored to your family’s needs.