We’ve already tackled the issue of whether or not giving a child an allowance is a financially healthy practice. Say you’ve decided you do think giving your son or daughter a few dollars each week is a way to build financial responsibility. Now you need to decide how much allowance is the right amount of allowance for your child. ThreeJars.com is an “online piggy bank,” a site that can help you find good ways to teach your kids about money. According to its masthead, the site is “an online bank for kids aged 6 to 13…Rather than cash, parents pay kids in IOUs, representing real money.”

Calculating the Correct Allowance

If you’re unsure of how much allowance kids usually receive these days, ThreeJars has a handy allowance calculator for you to use.

It’s easy to use: Just type in your child’s age, your birth year and how much allowance you received when you were as old as your child currently is. If your kid is 12 years old, you were born in 1971, and you got $4 per week as a 12-year-old back in 1983, the calculator shows you that your allowance would be work $8.75 per week in today’s dollars. However, the service recommends you stick to a more conservative allowance approach and provide your child with $6 per week. Click here to try the allowance calculator.Teaching Kids to Save, Spend and Share

When you sign up for ThreeJars, you set an amount to give your child each week. The service goes even deeper than that, allowing you to allocate certain amounts of money to your child’s “Spend Jar,” “Save Jar” or “Share Jar.” At that time your child will be able to request the IOU credits from you and you can pay the appropriate amount of allowance. Through the Save jar, kids can watch their savings appreciate through earned interest (if you’re willing to pay up).

The Spend jar formulates a ledger for your child, showing them exactly how much they have and the consequences — positive or negative — of their spending habits. The Share jar allows kids to choose to donate their funds to charity and see the effect on their bottom line. Kids can personally choose which charities they want to support and see how their money can make a difference.

ThreeJars is not a bank and is not affiliated with any banks. It does not hold deposits. The only cost is a $30 yearly membership fee assessed after the 15-day free trial membership period.

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  • I'd recommend setting the allowance based on what you think is reasonable for your child to purchase given your family's financial context – i.e., an allowance based on a simple concrete budget. Such an approach is less arbitrary, sensible to explain, and has the added bonus of introducing your child to the important concept of budgeting. For a young kid buying occasional trinkets, the budget might be expressed in simple terms like “1 pack of gum a month and 3 packs of Yu-Gi-Oh cards a year”. For teens, I'd recommend having them budget and pay for clothing items, entertainment, and maybe a few other spend areas – base the allowance on the budget (factor in the charitable & saving targets too), not some arbitrary amount. It's educational for the child, and you'll actually end up saving money. Bottom line: give you kid a “budget” (fiscal discipline), not an “allowance” (handout).