A penny for your thoughts... and a dollar for your efforts. It's the old allowance conundrum. We're talking chore charts, compensation rates and more. For an allowance novice, it can feel like a real handful. The dilemma goes beyond what to give and what not to give to your children. You have to find age-appropriate duties. You must implement money-managing strategies for your little worker bee. {relatedarticles}However, many experts believe there shouldn't be a correlation between chores and allowances. Chores should be done based on being a contributing part of the family unit, and children need to continue to contribute long after they have other sources of income. But before all of that, you have to put a well thought out plan in place. Should you decide to have an allowance program based on work performance, realize that your child must be old enough to recognize the value of money, which is usually about the age of 5. According to the syndicated columnist Dr. Tightwad, the allowance should be enough for your kids to blow, but not so much that you'll be bothered when they rip through their newfound funds.
The income your child receives she could increase as they get older and take on more responsibilities. Some experts recommend allotting one dollar for each year of the child's life. In other words, an 8-year-old would get $8 a week, a 10-year-old would get $10 a week and so forth. {relatedarticles}You should also have a heart-to-heart with your child regarding how the allowance will be spent. For example, you might set up a system where 1/3 goes to savings, 1/3 goes to spending and 1/3 goes to charity. You should also decide what your child needs to contribute his or her allowance to. For example, if they want to go to a birthday party, you may encourage your child to pay for part of the gift. Allowances should be doled out on a set schedule. And if you're going by a pay-for-performance scale with your child, make sure they complete their duties before receiving their earnings.