I’ve written in the past about the allowance system that we use with our kids. In short, we give them $0.50 per week for each year of age. Thus, Son #1 (who just turned ten) now gets $5/week, Son #2 (currently seven) gets $3.50/week, and Son #3 (currently five) gets $2.50/week. These funds and then subdivided into charity (10%), savings (30%), and spending (60%). The kids get to pick their own charity (with some help from us), their savings go into a subaccount at ING Direct, and their spending money is theirs to do with as they please (within reason, of course).
This system has worked very well, and our kids have learned some great lessons. They’ve learned the value of a dollar, how to save for big ticket items, how to splurge without going broke, and they’ve even learned the value of matching funds. Best of all, they’ve also stopped pestering us for stuff when we’re at the store. If they can’t afford it, they can’t have it, and they understand that.
Now that our youngest is about to turn three, it’s nearly time to get him in on the action. As I’ve noted in the past, we’ve found that our kids are pretty interested in money — or at least buying things 😉 — by the time they turn three. Just as importantly, they’re also patient enough to site alongside you while you count out their money and hand it over to them. I’m not sure if all kids are that way, but I see no reason to change things up in our case. If anything, Son #4 is far more precocious than his older brothers, and I’m sure he’ll love the freedom to make some buying decisions of his own.