Financial experts advise you to start teaching your children about the value of managing money as soon as possible, but according to a recent article in the Wall Street Journal, only about half of all children are paid a regular allowance. David McCurrach, president of a small Tennessee credit union, advocates starting your child's allowance when they are around age 3—as soon as the child can understand that money can buy things.

Once you decide to begin their allowance, the next tough decision is figuring out how much you should pay your child. The Journal recommends $1 a week for every year of age (eg, a seven-year-old would receive $7 per week). By age 9, most children are ready to receive an additional clothing allowance. Keep in mind that many financial advisors frown on paying allowances in return for chores or doing homework—these are obligatory responsibilities and don't warrant a reward. For parents who want to teach a lesson about contracts, the Journal recommends buying a prefabricated allowance contract from www.kidscontracts.com, designed to identify the permissible uses of the money—when raises will be given and even if loans will be available.