Giving your child an allowance is a good way to teach him or her about receiving and managing money.

When determining the amount of allowance for your child, consider the child’s age. On average the majority of American kids start receiving a weekly allowance around 5 – 7 years old, with a weekly amount of $1.00 for every year of age, until 16 when they start dating and driving when the amount is normally increased.

Allowances are not tied to completing chores, but are given as a way for kids to learn the value of money, budgeting, saving and spending.

You may want to encourage kids to put away a portion for charity and another portion for savings. If so, let them choose where to donate the money. It may be a cause that a child can relate to in some way, like an animal shelter or a group that helps sick kids. If some of the allowance goes to savings, consider setting up an account at a local bank. This way, your child can keep track of the money.

t’s a good to have them use it for discretionary things, not essential purchases such as food or clothing. This lets kids make buying decisions — and mistakes — without dire consequences.

There are a few don’ts you should pay attentions to:
- do not tie the money to the chores
- do not withold the money for misbehaviour
- do not take control of the money

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If you would like more info on this topic, I highly recommend Amanda van der Gulik’s new book Allowance Secrets. Amanda’s writing is a very helpful guide for parents to finally figure out whether we should be giving our children an allowance or not as a tool for teaching them about money. One of the key issues that I know many parents are trying to negotiate is whether children should be given an allowance or if they should earn their own money, or both.

To get you FREE COPY, click here.