Is My Child Ready For an Allowance?
By third grade or so, kids are learning about money at school and are often itching to handle their own. Starting an allowance is a great way to help your child learn about spending and saving (and work on some math skills, too!). Answers to your common family-payroll questions:
When should you start? Now, if you haven't already. "If you give your child cash and she mixes it with her toys or leaves it on the kitchen counter, though, she's not ready," says Susan Beacham, a mom of two and founder of Money Savvy Generation, a financial-education firm.
How often should payday be? Young kids should get money weekly. A monthly payday is a good goal for when your child gets older, though, since it'll help her practice making money last and resist impulse spending. Some kids are ready when they're 11 or 12, if they consistently save some of their weekly allowance.
How much should she get? Some families pay a flat 50 cents or dollar per year of a child's age, with a raise at every birthday. Others wait to up the pay until their kids show responsibility and a need for more.
Should you tie it to chores, grades, or behavior? Nope, say most experts. Older kids may skip chores when they don't need money, paying for grades sets a dangerous precedent, and cash rewards for being "good" can create emotional ties to money that can complicate your child's life.