I was thrilled a few weeks ago when Alisa T. Weinstein found me on twitter and asked me if I would consider reviewing her book Earn It, Learn It: Teach Your Child. My own kids are 5, 7, and 9, and are getting to the age when they like to have their "own" money to make purchases at the store.
In this book, she describes the "Earn My Keep Allowance Program where kids learn the value of money by test-driving real careers. Parents and kids choose a task from one of 50 fun careers, complete it within a set amount of time, and earn while they learn. The program is quick, easy, authentic, cheap (almost always free) and most of all, FUN! (www.earnmykeep.com)
In this book, she guides parents away from the traditional payment for "chores" such as making the bed and setting the table (which they should be doing anyway as part of a family working together) and moves towards introducing them to a variety of careers, and what it means to earn money in the real world. You can spend as little as 15 minutes per week on this method (or much more depending upon your availability and interest in the "career" of the week). I love that there are so many careers included in this book, but I would say that you are not limited to those included. If there is another career that interests your child, take the foundation of the program from the book and grow the idea from there.
I think this is a wonderful idea in today's economy to teach children from a very young age about fiscal responsibility. I think that there are other ideas that can be expanded on from this method when paying out the allowance. Once they have been taught about how to earn the money, you can then teach them how to be responsible with it. For example, if you were paying the child $10 per week (round number), you could have one jar for tithe (10%) and they could put $1 in. One jar for savings (10%) and they could put another dollar in. One jar for giving to charity (10%) and they'd put another dollar in. It could go on depending on your situation, until the final jar where they place the remaining dollars they are free to spend. Give them some check register (free at most banks) and let them track how much is in each jar. If they are saving for a specific item, they'll know and be able to plan exactly how long they have to wait until they can get it. This will teach them to save and pay cash for things they need, and not rely on credit!
My own kids love this book. They are very interested in various careers anyway, and the ability to earn money while learning about them just thrills them. I started involving my kids in normal chores from early on, and they haven't ever gotten an allowance for doing them, so I was did not have to make any changes. My kids do their own laundry (I turn on the machine and put in the soap, but they load the machine, empty the dryer, fold, and put away their own clothes. Even the 5 year old!), clean and clear the table, help with trash, etc. I hope you will each take a moment to look at this very affordable book and consider purchasing it to use in your own homes!