Most child specialists agree that the best way for kids to learn about handling money is to have some to handle. An allowance is a teaching tool through which a child begins to learn about living within his or her means.

How big an allowance is reasonable? When should it be started and how often should it be given? The answers depend largely on the child and will be discussed later. For now, note this rule: Every allowance should include some money the child can spend however he or she wants. If every cent is earmarked for lunches, bus fares and the like, the child gets no experience in choosing among spending alternatives.

Another rule: Don't come to the rescue every time your youngster runs out of money. The allowance should be realistic and determined by mutual agreement. If the child consistently spends fast and needs more, either the allowance is too small or spending habits are sloppy. Find the cause and act accordingly.

Here are some other rules to follow:

• Start at an appropriate age. Children start learning about money in school at age 6 or 7, and that's when they also begin to appreciate how far it will stretch (younger kids don't always grasp that). Start with a weekly allowance equal to half a child's age, which you can adjust up or down.

• Don't tie the basic allowance to chores. Some families are incredibly well organized. But many parents have a tough time keeping track of multiple chores over the course of a week. Even with online chore-tracking sites, the system can collapse under its own weight.

• Instead of attaching the basic allowance to everyday household jobs, tie it to "financial chores." Make kids responsible for some of their own expenses: collectibles, movie tickets, after-school snacks.

  To link pay with work, pay for "extra" jobs as soon as your kids complete them. That's easier to monitor than a week's worth of chores.

• Keep it simple. When children are younger, consider keeping track of their money with a simple checkbook system. Each month record their allowance (plus gift money or other income) in a checkbook. When they want money, have them write you a check and subtract it from their balance.

If you wait until the teen years to give your child money-management experience, you've waited too long. Your influence is waning.

Allowance is a teenager's ticket to independence. It can now be paid monthly to encourage long-range planning, and it should cover most daily expenses as well as discretionary income. Discuss your teenagers' expenses with them and arrive at a mutually agreeable figure. Then stick to that amount, giving it periodic reviews.

If a teenager takes a job to earn extra money, fine. This adds to the all-important feeling of independence. In general, you shouldn't penalize initiative by reducing the allowance, unless financial circumstances leave you no choice.

Still, there may come a time when the important issue is how much money a teenager really needs. If your son is earning $100 a week mowing lawns, for instance, he doesn't need another $10 or $20 from you. If your daughter baby-sits once in a while for an extra $30 or $40 a month, you will probably want to subsidize her earnings with an allowance. Teens should understand that certain responsibilities accompany their growing income. They need to become savers as well as spenders.

You can't always force teenagers to save, but they should be familiar enough with the family's financial circumstances to know whether they will have to pay for all or part of college themselves, or whether you can help with a car plus the expenses of gasoline, repairs and insurance. Teenagers' savings should be kept in banks, credit unions or savings and loan associations, not piggy banks. Introduce your youngsters to the services of financial institutions and let them see the advantages.

Next: Using Money to Reward or Punish