Giving your child an allowance is one of the best methods you can use for teaching financial responsibility. Once a child is able to start earning their own money you can start to really drive home lessons in saving, spending and planning. The best time to start implementing an allowance is once children have started school. It’s entirely up to you as the parent to decide how much your child should get and what they will need to do to earn that money. It’s best to sit down with your child and together come up with a reasonable list of household jobs that need to get done in order for them to earn their allowance. To keep track of what your child is responsible for, create a "chore chart" to hang on the refrigerator. Try to avoid giving your child money for ordinary events like brushing their teeth everyday or having good manners at the dinner table. These are things your child should be doing anyway. Don’t set up a model where your child won’t do anything unless they are financially rewarded.
Set up a savings account
If your child is consistently earning an allowance, you may want to help them open up a savings account. This will help them to become familiar with simple banking transactions and also give them a place to earn interest on any money they receive. If your child is a good saver, you may want to eventually discuss with them the option of a CD or money market account. If your child is a little older, take the time to sit down with a banking representative and have them discuss with you and your child the different saving options the bank has to offer.
Help kids establish a savings plan
If there’s something you know your child wants to buy but they don’t have enough money, help them set a goal to earn it. You may want to build in incentives for them to earn extra money by doing extra work around the house or, for bigger purchases, offer to match whatever money they raise. You can also encourage your child to suggest other ways they might make some extra money. They might be more entrepreneurial than you think.