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Step 1
Decide how you want your child to use their money before you set an allowance schedule. Some parents require half of the allowance to be placed in a savings account, some allow their children to spend all that they make each week. Whatever your plan, start it early. Trying to change strategies in the middle will cause problems.
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Step 2
Have a piggy bank or special place where your children can keep the money. Allow them access to it whenever they like. Children enjoy counting money and will recognize it as the result of their labors. Children also must understand that when money is lost or misplaced, they can't automatically get more. They must earn it.
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Step 3
For young children, pay by the job. Young children don't understand the concept of doing chores all week and receiving an allowance on Friday. They need motivation to continue to earn money. A nickel for small jobs and a dime or quarter for larger jobs will seem like the moon to a small child. A weekly or bi-weekly trip to the dollar store will reinforce the value of money.
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Step 4
As your child is better able to understand the correlation between chores performed and money earned, move them to a flat weekly allowance. Some experts recommend paying children a dollar per week for each year of age. Others encourage parents to instead look at how children will be using their money and adjust the allowance accordingly.
