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Once your child shows both an interest in and an understanding of the concept of money - the fact that it can be exchanged for goods - they are ready to start learning the basics of money management. For many kids, this may be as young as three or four. Their first allowance should be given at a minimum of once a week. Some would say a dollar for each year of age. Others would suggest you match the amount their friends get. Neither approach is really much help.

[edit] Steps

Arrange for your children to get a very small regular amount of income so that they can learn to manage money. They need to be able to make mistakes when the cost is minimal.
- Knowing the limit of available funds forces kids:
- To think about how much things costs, and
- To make spending choices between the many things that they may want.
- They have more appreciation for the things they buy when they use their own money.
Decide on whether you will give a standard amount to your child, or whether you will give the allowance only in exchange for the completion of chores.
Be sure to pay on schedule.
Consider using money management software to keep track of your payments.

[edit] Warnings

Remember, the purpose of an allowance is to give your children the opportunity to learn how to manage money through their own successes and failures and the input of their parents