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Fixed Allowance vs. Chore-Based Allowance: Which Should You Choose?4/13/2023

Child and Father

Every parent knows that feeling when a child is begging for candy at the checkout line or your teen asks for cash before going out with friends. Do you give in or make them use their allowance money? While paying allowances to children is common today, it’s wise to use this practice as a means to teach responsible money management and important decision-making skills.

Types of Allowances

Generally speaking, there are two main types of allowances – Fixed Allowance and Chore-Based Allowance. Sentiments regarding these types can vary depending on which expert (or parent) you speak with. While there are advantages and disadvantages to each, what you decide in the end should be whichever you’re more comfortable with and feel will benefit your child the most. Listed below are the pros and cons of both types of allowances so that you can make a better-informed decision for yourself and your children.

Fixed Allowance

A fixed allowance is a set allowance given out weekly (or monthly). For example, you may give your child $10 every week, regardless of whether they perform chores. If you choose a fixed allowance, it’s important to stress that they will not receive any extra money throughout the month. If a more significant expense comes up in the future, they’ll have to save up for it rather than ask you for more money.


  • It is helpful in budgeting when they receive a set amount regularly.
  • It allows them to recover quicker from financial mistakes.
  • It can teach responsible money management by requiring them to use their allowance for necessary things such as school lunches.


  • It doesn’t instill a work ethic since they will receive the allowance regardless of whether they perform chores to earn it.
  • It can perpetuate a feeling of entitlement since they know they will receive this money without working for it.
Chore-Based Allowance

Chore-based allowance is money awarded after the completion of chores. These chores often include household tasks, such as cleaning the kitchen, taking out the trash, walking the dog, etc. As your child ages, the chores could become more substantial and include items such as mowing the lawn, cleaning the garage, or washing the cars.

When using the chore-based approach, it’s always a good idea to stress that earning an allowance requires responsibility. Children should not feel as though they can just ignore the chores for a week if they don’t feel like doing them. Instead, it should be their responsibility regardless, and the allowance is a reward for their hard work.


  • It makes them work for their money.
  • It instills a work ethic by requiring them to allocate time and energy to complete their tasks.
  • It drives them to work harder in order to earn more money.
  • It allows them to decide if they want to do a chore to earn money – or forego that chore to do something else (hang out with friends) and the cost of doing that.
  • It means less work for you around the house.


  • It may be challenging to complete chores if they have a busy week or a lot of extracurricular activities.
  • It is not easy for them to budget since the weekly allowance can be variable.
Helping Your Child Manage Their Allowance

Teaching your child how to save and manage their money responsibly will vary by age. For example, younger children are great visual learners, which is why piggy banks are so popular for kids. Teens tend to need more flexibility when it comes to spending.

  • Kids: Consider opening a Youth Savings Account at the credit union. Then, when your child receives their allowance, save a portion in their piggy bank, and deposit the rest in their savings account. This strategy helps them understand their piggy bank money is for spending and the rest is for saving.
  • Teens: Opening a Teen Checking Account with a debit card is a great way to introduce your child to responsible money management. They will learn how to review their balance online and how debit card transactions work. You can also link your account to theirs – allowing you to monitor their spending and easily deposit their allowance right into their account.
We’re Here to Help!

There are many pros and cons of both fixed and chore-based allowances. Whichever option you decide to implement is entirely up to you. After all, you know what works best for your child. The important thing is that you’re teaching your child the value of money and instilling financial responsibility.

If you would like to open a Checking Account for your teen or a Youth Savings Account for your child, we’re ready to help. Please stop by any of our convenient branch locations or call (949) 588-9400 to get started today.

Each individual’s financial situation is unique and readers are encouraged to contact the Credit Union when seeking financial advice on the products and services discussed. This article is for educational purposes only; the authors assume no legal responsibility for the completeness or accuracy of the contents.

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