A recent study sheds some light on the concept of allowance.
The bottom line? Most kids get one.
In fact, 61% of parents surveyed said their kids received allowance. Do you pay allowance? Should you? Check out the facts first and then stay tuned for a cool product idea that might sway your decision:
The Allowance Facts- According to a study done by the AICPA:
- 61% of children receive allowance
- 54% started receiving allowance by the time they were 8 years old
- The average allowance totals $65/month (that's $780 each year!)
- Only 1% of parents say their kids save any of their allowance.
- 89% of parents require their kids to do 1 hour of work/week to earn their allowance
- Kids 4-12 average $5.90/week
- Kids 13-17 average 14.59/week
- Kids 18-25 average $34.88/week (really?! Don't ya think these kids should be earning their own money at this age? Just sayin'!)
- 48% of parents pay their children for good grades
- An "A" will earn these kids, on average, $16.60
I pay my kids allowance. I think it can be useful in two ways:
1. Teaching Ask that your kids begin to use their allowance for some things that you typically purchase for them (but that aren't necessities). For instance, if you're at the mall and your child "needs" an Auntie Anne's pretzel (and who doesn't?!), ask them to use their own money. Of if at the movies, your kids want the $8 tub of popcorn or the $4 bottle of water, ask them to open their wallets. This will teach your kids to begin making small, but important, financial decisions at a young age. As they grow, and the financial decisions become more significant, they will be equipped with the decision making tools necessary to make prudent decisions. Is it worth it? Is that price reasonable? Will I need that money in the future for something else?
2. Incentive If your child is motivated by money, then allowance can help you to instill a good work ethic. Tie allowance to chores, or grades, or babysitting. If your kid wants the new Xbox, working for and saving his allowance may be the only way to get it. He will soon see the connection between hard work and reward. Of course, if your child is not a "consumer", then try incentivizing with other things such as a later bedtime, more tv time or extra dessert.
It's called the Money Savvy Pig. It teaches kids how to allocate their allowance; a portion each week goes into savings, a portion goes to charity, some goes to investing and the remainder is their's to spend. I think it's genius.
Even if you give your child $1/week, think of the benefits. They're learning how to be responsible and you can even work in a math lesson. Ask them to figure out how to evenly divide their allowance into the 4 categories.
Learning. Responsibility. Charity. Decision-making. Math. This is one savvy pig!
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