Teaching children good money sense is one way we can set the next generation up for success. Granting an allowance gives kids experience with real money in exchange for the completion of age-appropriate tasks. Consider the following guidelines for allowance:

• Do not grant too much independence by telling them they can spend their allowance or a monetary gift on whatever they want. Encourage them to save at least some and advise them to spend wisely, helping them understand that money is finite – when they run out from spending, it is gone
• Do not take away allowance as punishment, as it is an educational tool that is directly related to their earnings
• For older children, carefully consider their requests for an increase. Discuss with your child why they are making such a request. You can spare yourself weekly negotiations by telling your child(ren) that they can only ask for an increase twice a year
• Do not reveal too much about your own finances in the process. Simply explain that your own budget is limited and there are other financial needs that must be addressed when your child asks you for something that is out of range
• Offer age-appropriate amounts for age-appropriate tasks; the amount offered should fit comfortably within your budget and align with your family’s goals.

Be sure to open a savings account for your child so they can see their money accumulating in a secure location. This can also help introduce them to the concept of interest.