Question for the Money Doctors
Question submitted on Apr 20, 2010.
QuestionMy 6-year-old son has been doing a very good job of picking up his toys and keeping his room straightened. I'd like to reward him for good behavior, but is it too early to start giving him an allowance?
An allowance is a great way to start teaching your child about the value of money, budgeting and saving. By the time your child is 5 or 6, he should be able to understand what an allowance is and why you are giving it to him. But before you start this commitment with your child, you should first set up the paraments.
First, you need to establish whether you want to tie the allowance to household chores or simply establish a weekly amount that they can use to save for specified purchases. Some families establishe a base allowance and then give their child extra money for additional chores. Whichever method you choose, be sure your child understands why he is receiving the allowance and what will prevent him for earning or getting it.
Second, you need to set the amount. Most experts recommend giving a child 50 cents to a dollar for every year of age.
You also will want to discuss how your child will be using this money. Will he put it into savings or will he plan on spending it on parent-approved items? Teaching your child not to spend the entire weekly allowance and to put a portion away in a savings account is a valuable life lesson.
For additional information visit http://www.360financialliteracy.org/