Amid a tough economy, a growing number of small municipalities...

Amid a tough economy, a growing number of small municipalities have had to consider measures such as dissolution to cut costs for local residents. Credit: iStock

Many children are sitting pretty. According to a survey by the American Institute of CPAs, the average yearly allowance is $780, and half of parents with kids in school also pay for good grades -- almost $17 per "A."

While most parents polled require their children to earn their allowance, they aren't talking to them enough about money management, experts say. Few kids save their cash.

"An allowance is a wasted teaching opportunity for most parents. They give money with no strings attached, then complain when their children are impulsive. Without instruction, they will do the same as adults," says Brad Klontz, of H&R Block Dollars & Sense in Kauai, Hawaii.

Here's how to make the most out of allowance:

Set clear expectations. Money should go into four buckets -- spending, saving, investing and giving away, says Klontz. Assess whether you will still pay for "fun" stuff like movie downloads without their dipping into their allowances, says Joel Redmond, senior financial planner at Key Private Bank in Syracuse.

Tie it to chores or not? Susan Kuczmarski, author of "The Sacred Flight of the Teenager," says, "They should never be tied to chores, good behavior, grades or punishment."

Create teachable moments. Advises Cara Vercellone, Charles Schwab branch manager in Smithtown and Huntington: "Pay your children biweekly or monthly. Have them create a budget."

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