Allowances: Amount to give? When to give? Why to give?

Allowances have been around for ages. The questions seem to be in a skewed order to me... I would say why, when, and the amount would be the order.

My daughter is still too young for an "allowance" per se' she is only 2, but it is something we have discussed so when the time comes we are ready. What my husband and I have come up with is that her "allowance" will be earned outside the home (I will explain I promise).

Currently we are using change as a reward for doing extra things around the house. She does not understand what it is, simply that is makes a neat noise when she puts it in her piggy bank. We use the same coins over and over, each night we take out a few and reuse them the next day. Basically just giving her the sense of accomplishment and putting coins in a "special" place.

As she gets older we will find jobs for her to do with us. We do merchandising so this is something we will be able to easily incorporate. The older she gets the more she can do, but she will have to keep track of the "jobs" she does and how much she gets for each one. She will receive a "paycheck" which will never be more than our set amount for her allowance would have been, but she will have actually "earned" it.

We also plan on having "errors" on her check. So that she will learn the value of keeping track of the "jobs" she does and how much she has earned. If you just give children allowances because they are breathing then there really is no purpose because you will also provide them any extra that they want and they know it.

Dave Ramsey has a great program for children as well. He is syndicated and helped my husband and I to get on the same page when it came to finances.

The primary thing I see with allowances is if you don't teach them the value then it serves no purpose, they are learning from an early age to get something for nothing and that is just not reality. There are certain things that our children will have to do around the house. They do not get their allowance for that, they do them because they are a memeber of the household and that is their contribution to the family.

You also need to look at your individual situation. For example if you are struggling to make ends meet, your children don't need to know the extent, but just giving them money that you need for bills is not helping them or you. The counter to that, is if you are sending your children to private school and want them to go out to the movies etc with friends from school you can't expect them to be able to do it on $2 a week. They will be saving for two months just to get in the door!

We live in a "Give me" society right now, which I don't believe to be a good thing. And yes it is fustrating as a family struggling to pay the bills and do what we need to do while others have it handed to them, but I don't want to raise our daughter thinking she can get money for nothing and that is life. I believe that children need to understand the value of money early so they can learn to manage it as they gets older, and if they never have any in their possession and no way to earn it how can we expect them to make good decisions when they are older?

So I guess the final answer would be that allowances are something that should be earned (with a preset cap, you don't have to specify that with them), not just given so that children can learn the value and receive a sense of accomplishment for earning something.