It is never too early to start helping your child develop good financial habits.  The practice of using an allowance can be worthwhile if it encourages saving and wise spending. 

 Tips for young children:

1. Set a weekly allowance to match the age of the child - $5 for a 5-year old.
2. Tie the allowance to some required chores such as setting the table for dinner or picking up the playroom.
3. Divide the allowance into three categories: one-third for immediate spending, one-third for a short-term purchase (such as a toy), and one-third for a long-term purchase (perhaps a bicycle).
4. Establish a bonus amount for extra chores or special effort.
5. Start a savings account and encourage adding to the account.

 Tips for teens:

1. Discuss how peer pressure may affect their spending desires.
2. Encourage teens to find after-school or summer jobs to help them save for the items they want.
3. If an outside job is not possible, consider paying them an hourly rate for more chores and treat it like a job.
4. Help establish a checking account and teach them how to reconcile it each month.
5. Talk to your teens about the importance of paying bills on time to establish good credit.
6. Talk about the costs of a college education and how they can help reduce costs by getting good grades and saving for some of the expenses.
7. Consider matching some portion of a teen’s savings account to encourage further deposits.

 Take advantage of opportunities to talk about finances to your children so that when they are ready to leave home they will have a foundation to better prepare them for their financial future.