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[quote=Anonymous][quote=Anonymous]Would love input from those of you who have had success structuring allowances that teach real money management. I've given my eldest allowance for a few years, but I'm not happy with how it's worked out because I feel like he has too much money to throw around. I think it's because I didn't require him to pay for enough things out of his allowance. It could also be because things are tight for the family and so I'm super sensitive to his spending which I perceive as wasteful.

What do your kids pay for out of their allowances? Their friends' birthday presents? Movies out with friends? School yearbooks? Anything they want?

Here's what I did in the past: $ per year of age, with a % to savings account and another % to charitable giving. At age 9, he received $6 spending and $1.50 for saving and charity. At age 10, things were tight for us financially due to diminished income, so  I kept his spending allotment the same with $6 to spend, $2 for charity and $2 for savings.  I paid for friends' birthday gifts up to $30, but with about 10 birthday parties a year, that adds up! I also paid tax on his purchases.

Now I need to start his little brother on an allowance too and I don't want to make the same mistakes.

Here's what I'm thinking. Would love any tips from those who've made it work!

Age 11: $6.75 spending (I had told him last year he would have a raise) with $2.00 charity and $2.25 to savings.
He will pay for: any miscellaneous toys he wants (as always), TAX on purchases (this will be new), BIRTHDAY gifts for his friends (also new), movies or Dave n Busters, etc. out with his friends, souvenirs at museums, amusement parks, etc. He also sometimes chooses to use his money to buy a snack I would not normally buy.  For family vacations (2 per year), we will give $15 extra in spending money to both him and his brother...so this is another $60 out of our pocket on top of allowance which will be $11 x $52 or $572 per year, even though under the plan $221 of that money will go to savings and/or charity, leaving  him with $351 to spend on birthday presents for friends, movies, etc.   He also gets gifts of money from his aunt and uncle once or twice a year, and he usually works at raking leaves, shoveling, etc, to earn extra money.

We pay for: sports-related expenses, extracurriculars, usual school trips, clothing, lunch money,  food (of course!), etc.

For the younger brother, we'll do the same split between savings/spending/charity but as it will be much less money, I'm wondering if it is reasonable to have him pay for birthday presents, when he'll only be getting $4 per week. I could perhaps subsidize some of the birthday presents, but then the older boy will no doubt make comparisons.   I'll also pay tax on his purchases until he is 11.

Thoughts? Links? Thanks so much!  
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Perhaps this is too compartmentalized?  Paying the tax on purchases seems like a bit of a pain logistically, and perhaps takes away the sense of ownership that comes from paying for items from your own funds.

Allowance could be a good way to teach kids to save and budget, but the more control you retain, the less they are able to learn using their allowance.  Growing up, saving was always emphasized, so my allowance mostly went into a savings account, though I did use it to buy myself some things my parents wouldn't otherwise pay for.  I ended up having a good savings account that I used in college to pay for clothes and incidentals.  
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