Experts agree that giving your kids allowance is essential to teaching them about financial responsibility, but instilling proper budgeting in children only works when the parents agree to a specific allowance each week — and a specific set of rules.
"Allowance only works when your kid has to take that sum of money and then manage it," Jean Chatzky, a financial journalist, said on Today on Oct. 11, and added that throwing in a few dollars here and there for them is more harmful than helpful.
According to a national survey for the American Institute of CPAs, 54 percent of parents pay their kids a weekly allowance starting at age 8 or younger, which Jean agrees is great practice — the earlier children learn about financial responsibility, the better.
But the old method of having kids work for their allowance through chores is not always best, she said, because children should not be motivated to help out around the house with money.
So how much should you give your kid in allowance each week for best money management?
"It would depend on the age of the child and the financial circumstances of the family," Clare Levison, a member of the AICPA's National Financial Literacy Commission, told Yahoo! Shine.
The average allowance is about $15 a week, but that doesn't go as far in today's economy — a single movie ticket costs $8, and a new video game can cost around $50 a pop.
The bottom line with allowance is to teach your kids the value of a dollar.
"Parents need to make sure they're also passing along financial sense with those dollars and cents," Jordan Amin, chair of the American Institute of CPAs' Financial Literacy Commission, told Yahoo! Shine.
"Earning, budgeting and saving are all important lessons that can be tied to allowances – lessons that can help put children on solid financial footing."
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