We started allowance the year our oldest asked, in the checkout line at Target, why she couldn't just have the $24 LEGO set, and I realized I had no good answer beyond "because I said so." Money was abstract to her because she'd never had any. The fix wasn't a lecture about budgeting. It was handing over a small, real amount of money and letting her run into the wall of it being finite.
The line that took us years to find
Here's where we landed, and I'd argue it's the right split: some chores are just the price of living in this family and never get paid, and a separate, optional set of jobs can earn money. Making your bed, clearing your plate, putting your own laundry away, those are free. Nobody pays me to do the dishes, and the family isn't a workplace where contribution comes with an invoice.
The paid jobs are the bigger, genuinely optional ones, and keeping them separate matters more than the exact amounts. Wash the car, weed a garden bed, clean the baseboards, the stuff a kid can take or leave. This way a kid never gets to refuse a basic responsibility by saying "fine, I just won't get paid then," because the basics were never on the payroll.
- Free chores: bed, plate, own laundry, picking up their own toys
- Paid jobs: car wash ($3), full vacuum of the downstairs ($2), garage cleanout (negotiable)
- A simple rule we like: pay roughly a dollar per year of age per week as the baseline, adjusted for what's realistic
Let them spend it badly
The whole thing only teaches anything if you let them make bad calls with the money. Our daughter blew three weeks of allowance on a cheap toy from the Walmart clearance bin that broke in a day, and she was furious, and that fury taught her more than any conversation I could have scripted. If I'd swooped in to prevent the dumb purchase, I'd have prevented the lesson too.
The complication, and it's a real one, is that little kids have no concept of waiting. A five-year-old saving for something three months out is mostly a fantasy. We use clear jars instead of a piggy bank so the money is visible and stackable, and even then, the patience comes slowly and unevenly. Some weeks she saves like a tiny accountant. Some weeks the entire jar goes to gumballs.