The Smart Way to Pay Kids an Allowance

As for how much to pay children and when to begin, experts say it depends on the family, but they agree on some general guidelines. Henderson says that most three-year-olds are interested in learning about money, and that interest deepens as they get older, so starting conversations and even a regular allowance early can be helpful.

"As soon as a child's 'gimmes' are past the toddler stage and they recognize that it costs money to pay for things, which can be as early as four, then it's a good time to start," says Weinstein. Henderson and Weinstein, along with many other financial experts, recommend paying about $1 for every year old the child is, on a monthly or weekly basis.

Weinstein's six-year-old daughter recently used her allowance to purchase a book. On her way out of the store, she told her mom how happy she was with her purchase. The allowance system, says Weinstein, let her get "that feeling of working hard for something and now enjoying it"—which was music to her mother's ears.

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