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Step 1
Teach them to count. When you give your child an allowance they need to know exactly what they are getting. If you give them a quarter, you can tell them that it is equal to a candy bar for example. They can understand a candy bar better than money.
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Step 2
Understand what the value of the allowance is. If your child wants to buy a computer game, a book or a new sweater, they need to know the monetary value. Take them shopping so you and they can find out the price and than let them know how many times they have to get their allowance in order to buy it.
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Step 3
Set up a budget. You may give your child a set allowance and they may have to buy certain things out of it. For example, if they have to buy lunches in school, this could come out of their allowance. Show them how to use the money wisely.
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Step 4
Buy the item. Teach your child that he can look for sales when he is ready to purchase the item that he wants. This way he'll have money left over to put toward another purchase later.
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Step 5
Be prepared to teach your spouse. If you marry someone who never had a budget, you can use the allowance budget to teach him too. Figure out how much their expenses are for a week, allot that amount plus some extra and allow them to manage their own money. They need to learn how to save for the things they want and be able to budget their money so they don't end up in debt.
