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When children get to be 6 or 7 years old, it’s only fair to establish your children’s allowance at a rate that is appropriate to their age, as well as in consideration for tasks they are expected to perform on a regular basis. Just as you are paid at your job for work performed, a children’s allowance program gives your children an opportunity to earn some money doing a few chores. This teaches your kids responsibility and helps to build confidence in their abilities, as well as giving them a sense of contributing to the family community.

While kids younger than six rely on you to make their beds and help clean their rooms, by the time they reach the 6-7 age group, they can do these tasks themselves. They can also help you set the dinner table, feed and exercise the dog, or make sure their dirty clothes ends up in the clothes hamper. However, they’re not very savvy about money. Setting up a children’s allowance fund of $5 a week, in exchange for their performing a few chores each day, helps them to understand where money comes from and what they can do with their earnings.

Prior to implementing your children’s allowance, it’s a good idea to spend some time with them, teaching them how to count money and make change. You can make this a game, ‘buying’ and ‘selling’ toys for certain amounts of money. You play the store clerk, taking the amount of money, bagging the item and giving them their change. Say that one toy is selling for $1.95 and another for $3.95. Be sure they see how much of their $5 they have left after each transaction. This helps them understand how fast that $5 can be depleted and how items can be a good buy, or perhaps not. They’ll be able to spend more wisely.

When you first establish your children’s allowance fund, make it clear that they may spend their money as they wish (you may want to exclude candy ” you’re still in charge of the food!), but, when the money has been spent, they’ll need to wait until the next allowance day before buying anything else. It’s important that this be an absolute rule that’s not bent. If you give in and front them some money against next week, you’re only teaching them to be irresponsible.

Let your kids know that, as they get older and assume more responsible chores, the children’s allowance fund increases. You can set a standard of a $1-2 per week increase each year, depending, of course, on their completing their chores regularly. This gives them something to shoot for and also explains why there’s a difference between your seven and fifteen year old’s allowance.

Finally, before you let them loose with all this cash, get your children a coin purse in which to keep their money. Otherwise, it might end up scattered all over the room, or lost. Your children’s allowance fund is the first step in learning responsible money management and the concept of a job well done.

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