It seems kids are earning a nice chunk of change from mom and dad. According to a recent survey by the American Institute of CPAs (AICPA), parents are paying their children around $780 a year in allowance, or about $65 per month.
But, according to the AICPA, not all kids are so lucky. Only 61% of parents believe in doling out the cash for an allowance. Which brings up the question, – should you give your child an allowance or not?
Growing up, my siblings and I didn’t see much in the way of a weekly allowance. We did things around the house because they were expected of us, not because they would lead to a payday. Babysitting and after school jobs were the way we made our money.
But, it’s hard to argue against the merits of providing children with an allowance as a way of showing them how to manage money. Allowances teach responsibility. Children learn that money does not grow on trees. They have to work and save for what they want.
Or so the theory goes.
Reality, unfortunately, may be far different. As the AICPA discovered, only 1 percent of parents say their kids save any of their allowance. And, worse yet, parents are far less likely to force their kids to use their allowance to pay for “fun” items.
According to the AICPAs:
“Children have broad flexibility with the money they receive. They most often use their allowances to buy toys or to hang out with friends, according to the survey, as parents handle other purchases. In fact, parents who pay an allowance are significantly more likely to also pay for discretionary items such as sport- and hobby-related expenses, mobile phone service, movie rentals and digital downloads.”
Instead of teaching kids how to responsibly manage money, we may be simply teaching them how to spend it.
In the end it may not be enough to just provide kids with a weekly paycheck. It seems we have to take a more active role in teaching them how to spend some, give some, and most importantly, save some.
BMWK, do you feel parents should give their kids an allowance?