DEAR MR. DAD: I’d like to get my children started on an allowance. Is there a way to set up a meaningful and reasonable system?

Answer: The best thing to do in setting up a family allowance policy is to take a moment to think about why you’re doing it.

In my view, the primary purpose of an allowance is to begin educating children in personal money management. If we keep our kids isolated from all the causes and effects of earning and saving and spending, we shouldn’t be surprised when they go to college and immediately start bouncing checks and maxing out their credit cards.

Another important reason is to give them some practice making their own decisions – and suffering their own consequences. Resist the urge to protect your child from making foolish buying decisions. If you intervene every time she’s about to spend rashly, the lesson learned is that Mom and Dad are mean for saying no, or that Mom and Dad will always be there to bail her out if she gets in trouble. Wrong lessons.

The beginning of elementary school is a good age to begin a weekly allowance, but even before that age, kids generally have money of their own, whether dollars from birthday cards or coins from the tooth fairy. Start with three containers marked Saving, Spending, and Giving. Whenever money comes into her hands, allow the child to make her own decision about how much money goes into each one (as long as something is allocated to each category). The amounts aren’t important; the self-guiding decision-making is.

Some parenting guides recommend one dollar per week per year of age. This one-size-fits-all concept is easy to remember but otherwise not particularly helpful. How many kindergartners really need six bucks a week?

It’s important to keep allowances separate from chores and behavior. Kids should have some non-negotiable responsibility for keeping the home and family up and running. If they fail at those, limit privileges instead of allowances, or you’re basically giving them permission to buy their way out of responsibilities.

Lastly, it’s important to spell all these things out to your kids. Make it part of the whole picture of family rights and responsibilities. Children get some things simply because they are members of the family. Those are rights. At the same time, they’re expected to do some things simply because they are members of the family. Those are responsibilities. And then there are the things that are dependent on certain behaviors or actions. Those are privileges. Issues such as allowances tend to sort themselves out far better when parents make it clear what falls where – and why.

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