Age-by-Age Guide to Giving an Allowance

After your child has had some fun with pocket money, he is ready to learn some of the things money can do for him. Berman urges parents to teach children how to save. "Allowance is part of spending, but it is also saving and learning about money," she says. "Americans don't save; they buy. It is important to make savings a habit. From the child's weekly dollar, 10 to 20 cents should go to savings."

"Kids vary on the desire to save versus spend," says Dr. Beeghly. "Again, kids tend to incorporate the family values. If you are savers, chances are your child will be, too."

Most banks encourage parents to help their children open up small savings accounts. Under some states' laws, savings accounts for anyone 18 and under are not subject to minimum deposit requirements or service changes as long as the account is in the child's name and social security number.

Tellers may frown on taking deposits of 10 to 20 cents. Your child can save regularly in a piggy bank at home; when it fills up, roll the coins in paper tubes and take them to the bank.