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Managing an allowance is your child's first experience with managing money. Your child needs to get enough to be able to afford some of the things he wants, but not so much that he is able to buy everything he wants. He should be learning how to budget and set priorities.

How much allowance your child should get depends on your child's age, what your child is expected to pay for out of his allowance, and where you live. Other factors include how much money you earn, how much the child is given by other people and what type of values you are trying to instill into your child.

Tying an allowance to chores can be a problem for several reasons. If your child is going through a rebellious age and never gets their allowance, then they will not have the opportunity to get money to budget. Another reason is that children should do chores because they are a member of the family, not because they are employees. Paying children extra for doing extra work avoids both of these problems, and gets your child off to a good start in learning how to work for the things they want.

Starting a child with an allowance at 3 may sound silly, but at this age they know what they want, and it is never too soon for them to learn to save up money to buy a special toy. In a typical city, $1 a week is reasonable if you divide it into two parts. Fifty cents can go to whatever they want, and the other 50 cents is to be saved in a piggy bank. Clear jars are good for this because it is easy for your child to see their money grow. Also put this where your child will see it frequently. The money in the jar is to be saved until it is at least 5 dollars. When it reaches $5, your child may spend it on whatever they want, as long as it is not against the house rules. When your child finds out how much that item he wants costs, he may actually choose to keep saving.

By kindergarten, children's needs change, and they will need a little more money for their allowance to be useful. Before setting the amount, think about what you expect them to pay for. Do you expect them to pay for their own treats or special clothing, for example. You probably don't, but giving them a small increase on their first day of kindergarten may help ease the transition, and allow them to see that there are greater rewards for more work. Anywhere between $2 - $5 is reasonable, depending upon where you live, and how many toys and treats you already buy your child. Continue with having them put half of the money into the savings

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