Dollar Wise Kids

Make an Allowance

The best way to teach the value of money is to give kids some of their own, so initiate a weekly allowance. Just how much is a personal matter, based on your financial circumstances and the going rate where you live. "If possible, start with an amount that's equivalent to half your child's age ($3.50 for a 7-year-old, $4 for an 8-year-old)," suggests Janet Bodnar, author of Raising Money Smart Kids. All the experts I spoke with cautioned that an allowance shouldn't be contingent upon meeting routine expectations such as unloading the dishwasher or feeding the dog. "It's important to teach children that doing chores is an expectation for everyone in the family," says Mary Gresham, Ph.D., a clinical psychologist in Atlanta. "If you want to give your child the opportunity to earn extra money -- by raking leaves or washing the car -- that's fine, but make it a separate transaction."

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