Children’s allowances can be puzzling for parents. What age do you start? How much should they get? What about saving versus spending? Different families have different answers that work best for them, so here are a few tips and resources to help you sort things out for your family.

First, start with what you want your kids to learn. Some families believe that a child should have to do certain household chores to earn their allowance. But, what if Johnny doesn’t care that he won’t get his allowance if he doesn’t clean his room? Then you’re stuck with a messy room and a kid who doesn’t mind being broke.

Other families believe that chores are just part of being a member of the family and Janie shouldn’t have to be paid to make her bed or clean up her toys. With this approach, the allowance is paid regardless of chores, but kids might get paid extra for special chores that go beyond what’s expected on a regular basis.

Both approaches have their merits – you just have to decide what makes sense for you.
As for what age to start and how much to give, those both depend on you and your child. Generally, your child should show some interest in money before your start an allowance and the amount should be something they can easily manage.

There are several good resources on teaching kids about money; one good one is a book called “Dollars & Sense for Kids” by Janet Bodnar. Do your homework and answer some questions before you decide on an allowance system for your children.

• How much of the allowance should your child save? It’s a good idea to designate a certain portion of your child’s allowance to be saved – preferably in a bank account – for later, bigger purchases or college.

• How much should go to charity? Use the allowance to teach your kids about giving back. There are plenty of causes that might interest your child and help you teach them about charitable giving.

• Who has the final word on purchases? Even though it’s your child’s money, you’re still the boss. Just as you can establish rules for savings and giving, you should reserve the right to veto any inappropriate purchases. Your 7-year-old wants to spend his money on a violent video game? Your 9-year-old wants her ankle tattooed? Just say “No.”

• Who pays for movies, gifts, clothes and other expenses? As your kids get older, they can pay for their own expenses and learn to budget their allowance. For example, if your daughter wants new jeans for back-to-school, let her decide whether to pay $65 on a pair from a high-end mall store or get three pairs for $20 each from a discount store. Or if your son wants a $150 pair of athletic shoes, you might offer to pay a certain amount toward the shoes and make him come up with the rest from his allowance. When it’s their own money on the line, the labels might become much less important to your children. Just be sure the allowance they receive is a realistic match to realistic expenses.

And a few reminders for you:

• Be consistent and pay on time. Whatever allowance system you set up, stick to it. You want your children to learn they have to live up to their end of a bargain, so you need to do the same.

• Avoid the “I’ll pay you back, I promise!” trap. If you lend your children money on the promise they’ll pay you back from their allowance, hold them to it. Consider it their first lesson in using credit wisely.

An allowance can be an important part of making your children financially literate. If they don’t learn from you, they may not get this important education anywhere else.

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