Teaching kids how to handle money is essential to them becoming responsible adults. One of the ways to teach them about money is to give them an allowance. How you go about this is up to you. You could dole out one set amount every week, or vary the amount and frequency according to your schedule. Here are some factors to consider when determining how much to give.

Age

Generally, the older the kid, the higher their allowance should be. Many would consider giving $20 a week to a 3-year-old unnecessary, as they don’t understand the value of money. You could, however, stash most of it away in a savings account for the child to use later. While a dollar or two each week might suffice for a young kid, it might not work out so well for a teenager who knows how little a couple of dollars a week goes. They might be better off with that $20 a week, providing you can afford it.

Budget

Your family’s budget plays a big part in how much allowance you give. If your budget is tight, then a dollar for the little ones and five dollars for your teen might be all that you can afford. Don’t let the budget constraints get to you. Something is better than nothing, and you can always help your older kids supplement their earnings with odd jobs.

Chores or expenses

Opinions vary as to whether you should base your kids’ allowances on the chores they do or the expenses they have. Some argue that allowances should be work based. You should give your kids a list of chores to do, and if they complete them to your satisfaction in the time given, you should give them an allowance. Some take it a step further and argue that kids should be paid according to the work they do. Why should you pay your son $20 a week just for taking out the garbage? Pay them by the job, and should they complain, suggest they add to their chore list to earn more. Others argue kids should do chores regardless of the rewards involved and allowances should be expense based. You should calculate the expenses your kids are responsible for, such as school supplies or gas for their car, and give them an allowance that covers that.

However you go about determining the amount of your kid’s allowance is up to you. You might decide to base it on all of the factors above or just a few. You might pay your kids a set amount every other week regardless how much work they do.

However you go about it, use the opportunity to teach your kids how to handle money. Discuss with them the best way to use the money, whether making a purchase, paying for an expense or saving it for a rainy day. Go shopping with them and show them what they can afford to buy. Should they find something they cannot afford, encourage them to save up for it. Learning early on how to save will make major purchases later on, like a car or home, much easier.

Teaching kids how to handle money is not easy, especially if they do not have any money to begin with. You can fix that by giving them an allowance.