How much? What age? Chores?

Paying kids an allowance, like so many family matters, is fraught with fuzzy edges.

"There really is no one right way to do it," says Amy Nathan, author of "The Kids' Allowance Book."

Even though the approach often varies from family to family, even from child to child, Ms. Nathan says the main thing is to keep the allowance going. "It's just such a good educational tool for learning about money."

Sharon Danes, an economist at the University of Minnesota who does family financial counseling and studies children's grasp of money matters, agrees.

"I know from my counseling work that we need to start teaching children about money much earlier," Dr. Danes says. "By the time kids are school age, they've already got a lot of their motivations and expectations about money."

An allowance at age 5?

What's the right age to start giving an allowance?

"It all depends on when the child understands what money is and what you can do with it," says Nathan, whose research found some five-year-olds with allowances. It's much more common, though, for allowances to begin when children are between 7 and 9. (About half of nine-to-14-year-olds get allowances, according to national studies.)

One advantage to starting early is that younger children can learn simple, valuable financial lessons with just a little loose change.

They are going to make mistakes, Danes says, so the smaller the amount the less rides on the outcome. Better, for example, to see the folly of wiping out a $1 allowance on candy than blowing $10 foolishly.

"You're really teaching them a skill. When a mistake is made, help them figure out what needs to be changed. One of the stickiest issues is determining whether to tie the allowance to chores.

In her book, Nathan says studies show that most children must do chores to collect.

On average, three chores must be done each week, with room cleaning, dishwashing, vacuuming, lawn mowing, pet keeping, table setting, and garbage and laundry duty among the most common.

There are two basic problems with chores-based allowances:

1. They can become a record-keeping burden.

2. When a job is undone or poorly done, parents are faced with the ticklish job of withholding all or part the allowance.

To avoid this, some parents give what Nathan calls "just because" allowances. Children are encouraged to help out just because their help is needed, but their allowances aren't contingent on doing any chores.

Many parents wind up dipping into both philosophies and utilizing a hybrid that works for them.

The Gray family of Needham, Mass, adopted sort of a pay-as-you-go approach. Sons Brendan (12) and Matt (10) were so busy with sports and scouts that doing weekly chores wasn't practical. Now, whenever they need spending money they work for it. "They can mow the lawn, rake the leaves, or do some serious house cleanup for $5 a hour," says Taylor Gray, the dad.

The Stephens family of Harpswell, Maine, thought they would tie the allowances of Jenny, Matt, and Kate (now 9, 13, and 15) to chores. "But then we said, 'No, we're a family; we should all do chores," says Myna Stephens, their mother.

So now each child gets a bare-bones weekly allowance ($1, $2, and $4), no strings attached, plus they can earn more by completing certain jobs - Matt mows the grass and Kate does the laundry.

The problem the Stephenses and many other families run into is keeping track of what has been paid. "It's basically the kids who come forward and say, 'Hey you haven't paid me in a while. That adds up to at least $45.' "

Being consistent, Danes says, should be a priority for parents, which can mean posting allowance-due reminders on a central calendar, say, the refrigerator.

For some parents, monthly, rather than weekly payments are easier.

Other suggestions:

*Pay older children more as they often have more social expenses.

*A good time to raise allowances is at the beginning of a new school year.

*Encourage children to divide their allowances: some for spending; long-term saving; charitable giving or Sunday School collection.

One way is to label three jars (savings, spending, church); when the allowance is paid, it's divided and deposited in each jar.

Money talks

Discussions about what percentage goes to each jar and how much is earned are important.

"The negotiations you have about allowances when children are 9, 10, 11 years old," Nathan says, "are really training for developing good communications. Then during the teenage years, when there are more complex things to negotiate, you have a track record of tackling and solving problems together."

Danes considers it especially important to discuss the allowance at the outset, to get input from the child, and to make it clear whether the allowance covers all or some clothing, eating out, movies, trips to amusement parks, etc.

"If the child is clear about what it includes and doesn't include then there's less chance for tensions to evolve" Danes says. "You establish that these are the initial guidelines, and then we go from there."

Parents, she says, need to be flexible. "If things are not working out, you may agree to relook at things at a certain point. But negotiating should not be done on a continual basis at the whim of the child."

Allowance Guides

'The Kids' Allowance Book,' by Amy Nathan Walker and Company, $8.95. 1998.

Written for children but parents can learn too from this fun and succinct work, which includes a helpful troubleshooting guide.

'Children and Money: Allowances and Alternatives'

This presentation, on the University of Minnesota Extension Service Web site, is an excellent primer for adults. It also provides a sample allowance contract.

www.extension.umn.edu/Documents/D/A/DA6117.html

What American kids make (Average weekly allowance from survey of 1,000 children)

Ages 8-9 $3.74

Ages 10-11 $5.19

Ages 12-13 $6.66

Age 14 $9.45 Source: Zillions magazine by Consumer Reports, January 1999.