An allowance for children is the first way most will learn the power of money. Teaching a child how to save and spend sets them up for behaviors later on in life. Children learn independence and the difference between saving and instant gratification.
In this day and age, there is a misconception that money comes from a little card and is not something parents work to earn. This should be dispelled as soon as possible.
It’s up to parents to decide when it is appropriate. They need to add and subtract well. In order to decide if a child is ready, allow them pay for purchases and monitor whether they understand correct change.
Responsible grownups do not carelessly use money. Though children need to enjoy the money they receive, it helps that they understand how squirreling it away can help, too. If their belief is that mom and dad have money to spare, they will use it as such. Allow children the opportunity to learn by giving them their own cash and teaching them to manage it without supplementation. From there comes the understanding that money is not always available just because one asks.
Invest in a savings account where the child would be able to deposit a portion of their monies each month. This helps with controlling finances. Children become awakened to how their money adds up when saved. Take it a step farther and buy CDs or place some in a money market account. There are loads of lessons to be learned and independence to be gained from deciding between spending and saving.
Parents should determine if an allowance for children is best by observing their behavior around money. Giving them money in which they will be responsible is key. Make sure to guide them and give them lessons to take well into adulthood.
Teaching-Kids-About-Money.com have a lot of great resources. Teenagers Pocket Money Teaching kids should be a fun activity. Encourage your child to start using money effectively.