Money Lessons for Kids

From her bridal boutique in Roseville, California, Lori asks if she should give her 10-year-old daughter an allowance of $20 a month. "I read a recent article that said to give allowance not based on chores, but based on the fact that they're a part of your household," Lori says. "I was wondering from Suze, how much I should give her and what would be an appropriate amount for a 10-year-old?"

Suze thinks the article Lori read is wrong. "You get an allowance simply because you live in a household? No! Money has to be earned," she says.

Based on the federal minimum wage of $6.50 an hour, Suze calculates that each minute of work is worth roughly 10 cents. It will take about four hours of work to earn the $20 Lori's daughter wants. Suze says this is a good level to start a child's wages. "Now if they do that job efficiently, you can give them a pay raise. If they do not do that job efficiently, ... I would actually decrease their salary, so that the kids understand good work equals good pay equals job promotion. Bad work equals getting fired," she says. "And when they learn that at 8, 9, 10, now what are we talking about? We have a kid that knows they have to work for something."

What kinds of work can Lori's 10-year-old do to earn her wages? Is cleaning up her room or making her bed enough? Yes, Suze says these are good tasks for a kid as long as it helps her parents. "You guys have to decide together what helps you really around the house," she says.