- Step 1: Start early Start giving your child an allowance around the time they start first grade.
- Step 2: Compile a list of chores Most parenting experts agree that children shouldn't receive an allowance for doing daily chores, like cleaning their room or washing the dishes. But, some experts suggest parents pay per-chore for extra, less frequently done chores like cleaning out the garage or mowing the lawn.
- Step 3: Set an amount Set a weekly amount: Consider 50 cents to $1 per year of age per week. Your child should use their allowance for discretionary spending, not essential purchases like food or school supplies. This lets kids learn from their buying decisions and mistakes without overly harsh consequences.
- TIP: Set a day of the week when you pay the allowance, and always pay on time.
- Step 4: Make them save Require your child to save a percentage of their allowance each week into an account in their name. It instills a sense of pride and teaches money-management skills. Encourage them to donate occasionally to the charity of their choice.
- Step 5: Look beyond cash Ask your child if they'd like some of their allowance put on a gift card to a store that has something they want to buy, or into an account they have with an online store. This teaches goal-setting, since they're saving for a specific purchase.
- Step 6: Encourage them to keep track Have your child track their purchases. Seeing their financial choices in writing helps them learn how to make better decisions about saving and spending.
- Step 7: Be flexible Don't be afraid to modify the arrangement as time goes on if some aspect of it is not working for one or both of you.
- FACT: Several credit-card companies offer a prepaid debit card for parents to give to teenagers with a spending limit and online balance information.
You Will Need
- An agreed on weekly amount
- A savings account