When to introduce an allowance?

My 2.5 year old gets 4 quarters a week as his allowance. He has to keep his room reasonably clean, put his plate and silverware in the sink after a meal, and loses a quarter for every 3 time outs. If he has no time outs that week, we also throw in a $5 worth of used books. If we're on a road trip, he gets a dollar for every 500 miles he behaved that he can spend at that gas stop or save.

We have a magnetic responsibility chart we found at Target, and it works great. He mostly likes to just count his money and put it in his piggy bank. I think he's up to $30ish. He has some concept of money, in that you do work to get it, and when you spend it, the cashier keeps it.

When we were kids, our allowance was for things our parents wouldn't buy. For instance, if one of us was being a shampoo snob or wanted designer clothes, we were responsible for the difference between that and what our parents were willing to pay for. He's not old enough for that now, but when I was a kid, it made me think about the relative value of things (ie was a $100 pair of girbauds worth 5 pairs of outlet jeans?).

It taught me a lot about saving, and I guess you could say it paid off, since I'm probably one of the few people to own a home in the DC metro area by 23 and not get bitten by the subprime meltdown. I think if you teach it's better to save than spend it on impulse items, you'll be a lot happier hen something does come along.

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I think a regular allowance would go over the head of most 2-year-olds, but games and rewards involving pennies (initially), which he gets to keep and spend, would be appropriate. Trips to stores where you can actually buy tiny things for a tiny amount of money are great for this purpose, or you could set up your own play store at home. Once he begins to understand the values of different coins (particularly pennies, nickels, and dimes), you might set up a regular allowance. I've seen this done meaningfully as young as age 3.

I think a distinction should be made between a regular allowance and work for pay. The purpose of an allowance is to give kids a bit of financial responsibility and freedom, consistent with their ability to handle it. Initially the "responsibility" might be purchasing his own candies, desserts, or very small playthings such as art paper, stickers, or fabric scraps for dressing their dolls. Gradually, it can be increased to cover more practical things such as school lunch food, books, etc. Once the child gets an allowance to cover these things, they should almost never be purchased by the parents except for special occasions like birthdays. That way the child learns not to take for granted things that need to be bought. In addition, the regular allowance should normally not be withheld on the basis of nonperformance of duties, etc. - though permission to freely spend it might be suspended.

An allowance can be supplemented by work for pay, including basic housework, improvement in a challenge area (such as academics or behavior), and special projects. I would hesitate to use it for good behavior that is normally to be expected without pay; but for children who have issues and need assertive discipline in this area, rewards may be appropriate, including a small amount of cash.

I would keep all sources of money very small and avoid giving the child a sense of entitlement. "What will I get if I do the right thing" is a big red flag for me.

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I love allowances. We give our 6 year old $2 and our almost 4 year old $1. When they ask for something at the store I can tell them "sure, but you will have to use your allowance for that." It is amazing how much less desirable the toy becomes when it means they have to part with some of *their* money to buy it." Every couple of months we go to a toy store and they use their allowance to buy something. It also means that if there is something they claim to really want I can tell them that they will be able to get it the next time we go to the store. It really cuts down on the whining about things....a lot!!

I'm not a big believer in giving an allowance for chores. What if they decide they don't care about the allowance and would rater not do the chore. Then all of a sudden the chore is not something you do because you are part of a family. Rather, it is something you do in exchange for something specific, which you may or may not want.

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