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Set an Allowance
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Step 1:
Decide what your child needs
An allowance can be based on your child's age, your own financial resources, the expenses it will cover and the goals you and your child wish to accomplish. Basically, you want to come up with a realistic, agreed-upon amount that your child can manage with confidence.
To set an amount, sit down with your child and create a list of expenses (lunches, after school spending, weekend activities, savings and so on) to help each other understand what the money needs to cover. Be open to your child's needs and wants. Consider short- and long-term goals, such as special events or savings plans, and be honest about any specific rules you want to set.
Ask yourself the following questions before you sit down with your child:
Will the child be allowed to spend freely, or will you expect a record of purchases?
Will you encourage savings? Will you require it?
Do you want to provide ways for your child to earn extra cash?
Will you allow advances for special situations? How will they be repaid?
Will you limit what your child can and can't buy?
What type of rationale will you consider when it comes to increases?
Kids of different ages will want to use their allowance for different things. It's up to you to help them set limits and goals. After that, it's up to them to stay within those limits and reach those goals, and also to learn from mistakes when they don't.
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