“Mom, can I have an ice cream?”

That’s how it starts. With a seemingly innocent request for a treat – that requires money. This is your first opportunity to share with your children that these treats aren’t free and to give them a basic understanding of how our currency system works. We want them to learn that money is something they earn and save for bigger goals, not that it magically appears when a parent sticks a small piece of plastic into the money machine.

As soon as kids are old enough to start asking for a treat at the grocery store, they’re old enough to understand the concepts of money and an allowance. Whether your start with a quarter or a dollar, pay your child during each week your family meeting (you are holding those, aren’t you??). As they develop confidence and maturity, you can increase the allowance while you increase the number of purchases they are now responsible for.

Harassed for treats during shopping trips? No longer a problem. Now you can politely ask your child if she brought her allowance (or her wallet) when she makes a request, and if the answer is no, suggest that she might want to save her money and bring it with her next time for a treat. There may be a bit of a shock when she realizes that you’re not going to float her a loan, but she’ll begin to be more conscientious about bringing her wallet and judiciously spending her money if you hold your ground.

You can start providing an allowance when kids are old enough to understand and be aware of the need for money, and as they age, the amount can be renegotiated based on need. What if the “need” is bigger than the allowance? There are a few options. Encourage your children to save the whole amount all on their own, match what they contribute, or tell them that you’ll pay the balance once they reach a certain dollar amount in savings. If their needs are greater than what your family can afford, they can find alternative ways of making more money through babysitting, mowing lawns, or other entrepreneurial ventures. (My cousin baked and sold carrot cakes to friends and family members to raise money for her first trip to Disney World when she was about 10 years old.)

Parenting experts are divided on this, but I feel that it’s a bad idea to tie allowance to chores. While it makes sense from a motivational perspective when your children are young, by the time they’re teenagers, you’ll have a hard time convincing them to continue to do the chores at a fraction of what they can make at their minimum wage jobs. While there is an argument to be made that when a person “works”, they get paid, I don’t really see chores around the house as “work”. Because even the adults who work for a paycheque outside the home still end up cleaning their house without pay (or paying someone else to do it). My feeling is that a better approach is that with privileges (i.e. allowance) comes responsibility (i.e. chores). Everyone gets an allowance because they are a member of the family, and everyone does chores because they are a member of the family

While it is tempting to step in and rescue (after an appropriately long lecture, of course!) if your child overspends and runs out of money, this is a bad habit to get into. It gives the impression that adults will always be there to bail the kids out, rather than providing an opportunity to learn from their own mistakes and develop confidence and responsibility when it comes to money. As the current state of the American economy shows, this is a lesson many adults have not fully come to terms with – let’s hope we can provide a better example and an opportunity for our kids to not repeat these mistakes.