# The Easy Way to Set an Allowance That Won't Ruin Your Kid

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Like many kids, when I was young, my parents gave me an allowance each week. Even as an adult, I continue to cut myself a break in our budget for a monthly amount that's just mine to spend however I like.

But how much is enough for kids? And what should the rules surrounding cash be so that they learn to respect and value money? Let's examine this issue from all angles, shall we?

## Age

As soon as your child appears to have an understanding of what money is, you can start him or her on an allowance. For some, this might be as soon as ages three or four. For others, waiting until grade school might be more appropriate. Young kids can learn the basics of money by counting dollars or even using these coin popsicle stick puppets. And so many of us adults use credit and debit cards for most purchases, but I'm starting to pay for more stuff in cash so my daughter can observe the exchange. Interestingly enough, she's already started asking questions.

## Amount

There are a number of ways you can figure exactly how much to give your child. Most of my friends follow the guideline of \$1 a year per week. So, for example, a seven-year-old kid would get \$7 a week to spend or save. But you need to choose a number that works for you and your overall budget, too. Factor in how much money you generally spend on your child each week (add in anything and everything), and see if you can portion any of that into an allowance to shift the financial responsibility.

If you're totally stuck, you can use this handy calculator to help calculate an appropriate amount. Personally? I like the idea of doling out an allowance monthly versus weekly. My daughter is three-years-old, which would mean she would get \$12 a month using the standard system. However, \$8 sounds more appropriate for my family's budget and how much I feel she needs at this stage. You see how quickly you can make the decisions versus following standard practices. In other words: there's really no right or wrong answer to this question.

## Work

You decide if your child has to work (or not) to earn the weekly wage. Experts are still split on this issue. However, as adults, we know that money doesn't fall out of the sky. And most of us aren't handed cash on a regular basis just because. In my opinion, part of the whole allowance thing should involve at least some type of chores or other work.

While not all helping should be rewarded with money, combining the two can be empowering for kids and positively inform their work ethic early on. Consider setting chores that are simply part of everyday life and garner no monetary reward. For earning an allowance, you can set some that are additional — above an beyond household responsibilities.

Here are some ideas to organize yourself.

### Chore Cards

This system can work for younger kids and older teens alike. On each card, you write a task and define what it entails. Your child performs multiple tasks and, therefore, earns his or her allowance.

### Chore Chart

With a different approach, this chore chart gives kids instant gratification for the work they do. On Monday through Friday, kids earn \$1 a day for completing all assigned tasks and get to see this money grow each day.

### Jar System

Give your child a glass or plastic jar with her or her name written on it. Stash popsicle sticks inside with chores written on them. You can even define dollar amounts for each associated task.

## Save and Share

Encourage your child to put away some allowance money into savings each week. This doesn't have to mean opening an account at the bank just yet. Instead, set a designated jar or stash money into a piggy bank. A clear container works well because it allows kids to watch their money grow. And while you're at it, use small bills, so it's more obvious as it piles up. Visual cues are powerful in this regard.

Some families even have their children stow away a portion of their cash for charity and donations. How you approach an allowance is ultimately up to you and influenced your family's unique situation and values. You are in control and can help set the tone for how your child approaches money in life.

## Reward

As far as what kids can spend their money on, it should really be up to them after all the saving and sharing portions have been taken out. This is the part where there's a lot of learning and trial and error involved. If you give out allowances weekly and your child spends it all on the first day, don't cave and buy whatever trinket he's clamoring for later in the week. In a way, you're teaching your child to slowly learn from his or her own mistakes.

You can always help guide the process by introducing basic budgeting techniques toward a certain toy or item. Regardless, be prepared for missteps and disappointments. It's all part of learning about money and gaining that fundamental understanding that we can't have everything we want.