Decide When to Start Your Child's Allowance

Physician's Money Digest, May 2007, Volume 14, Issue 5

Wall

Street Journal

Financial experts advise you to startteaching your children about the value ofmanaging money as soon as possible, butaccording to a recent article in the , only about half of all childrenare paid a regular allowance. DavidMcCurrach, president ofa small Tennesseecredit union, advocatesstarting yourchild's allowancewhen they are aroundage 3—as soon as the childcan understand that money can buy things.

Journal

Journal

Once you decide to begin theirallowance, the next tough decision is figuringout how much you should pay yourchild. The recommends $1 a weekfor every year of age (eg, a seven-year-oldwould receive $7 per week). By age 9,most children are ready to receive an additionalclothing allowance. Keep in mindthat many financial advisors frown on payingallowances in return for chores ordoing homework—these are obligatoryresponsibilities and don't warrant areward. For parents who want to teach alesson about contracts, the recommendsbuying a prefabricated allowancecontract from www.kidscontracts.com,designed to identify the permissible usesof the money—when raises will be givenand even if loans will be available.