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Allowance Basics

An allowance can be a great way to teach your child money management skills.With an allowance, your child can learn how to make decisions, deal with limited resources, and understand the benefits of saving and charitable giving.

There's no one correct way to handle allowance. As you decide when to start it, how much to give, and whether you want to link the allowance to chores, it's important to make the choices that are going to be the best fit for your family and your situation.

Starting an Allowance

Though there's no particular age that's right to start an allowance, it's a good idea to start it by the time a child is 10 years old. By that time, it's likely that a child has many opportunities to make thoughtful spending decisions, but he or she still looks to parents for a significant amount of guidance.

How much allowance should you give? It's going to depend on your financial situation and what kind of commitment you feel that you can comfortably keep. Experts generally recommend that kids get 50 cents to $1 per week for every year of their age - $3.50 to $7 for a 7-year-old, for example.

Regardless of how much you give, it's a good idea to regularly disperse the allowance and increase the amount as the child gets older.
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