by Josephine Polifroni

Created on: July 01, 2010

Everywhere around us is evidence of the importance of handling money. While teaching our children about money has always been important, it seems more crucial than ever to take every opportunity to make good choices ourselves when making decisions about money with our children.

Pocket money is often thought of as sufficient money to carry us through the day to pay any small expenses. In Britain, it is the term used for allowance. Either way, how much cash a child has to spend is definitely something parents should oversee. There are many factors to consider and no hard and fast rules except that boys and girls should receive the same amount.

Parents need to talk before speaking to their child. Some people believe children should only receive money in return for chores. Others believe children should receive a certain small amount of money that is not dependent on doing chores. There is also the question as to whether the child should receive certain funds that cover certain normal expenses the child has, such as bus fares or music lessons. In this case, the child would be responsible for keeping that money aside and not spending it so that it is available for these expenses.

The ideal plan is to take this opportunity to teach your child some important life lessons while giving them some independence in making decisions and mistakes in a protected environment. At the same time, it is important that they do not have too much cash at their disposal so their mistakes do not have large consequences.

Parents also need to impress upon their child that this is not a competition. How much money other children are getting from their parents is a factor, but cannot determine the absolute amount you decide is appropriate for your child. This is a family decision that must be made based on what your child needs and family finances.

Allowance calculators usually work out to $1.00 per week per each year of the child's age. With this formula, an eight year old would receive $8.00 per week. Using this same rate, however, a five year old would receive $5.00 per week and a fifteen year old, $15.00 per week. Neither of these amounts may be appropriate. A five year old is most likely too young to have that much cash every week unless you structure it so some is saved. This is a good first lesson in handling money. On the other hand, $15.00 per week is too little for a fifteen year old even if it is just for entertainment. Even if they have a job they are still entitled to a certain

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