NEW YORK – A new survey found that children are raking in an average of $30 a week in allowance, enough to save around $1,500 in a year.
The Harris Poll conducted the survey of 1,002 U.S. adults on behalf of the American Institute of CPAs (AICPA).
In just a few years, a diligent saver could buy their first used car, but AICPA says it’s concerning that only 3% of parents say their kids primarily save their allowance. Parents say most of their kids' allowance is spent on outings with friends (45%), digital devices or downloads (37%), or toys (33%).
Three-quarters of Americans (75%) say the most important purpose of providing an allowance to children is to teach the child about the value of money and financial responsibility.
“One of the best gifts we can give our children is a solid education on how to manage their money,” said Gregory Anton, CPA, CGMA, chair of the AICPA’s National CPA Financial Literacy Commission. “Simply handing money over to a child without guidance is a missed opportunity. By making an allowance a teachable moment, parents will help instill money management skills in their child at a young age that will help prepare them for the important financial decisions they’ll have to make when they’re older.”
More than 4 in 5 (86%) Americans believe kids should receive an allowance, most commonly saying every cent should be earned and linked to chores (52%). While a quarter (27%) believes it should be partially earned and partially gifted.
The AICPA’s National CPA Financial Literacy Commission recommends that parents who choose to provide an allowance use it to help their children understand the value of money.
“When it comes to managing money, a child’s first lesson should come at home,” added Anton. “From explaining how many quarters are in a dollar, to helping children start a savings account to watch their money grow with interest, parents have the opportunity to establish a strong foundation of financial knowledge for their children that will benefit them their entire life.”
For parents looking to teach their children about financial responsibility using an allowance, AICPA provided these tips:
1. Start Early
2. Set Clear Parameters
3. Use an Allowance to Talk About Budgeting
4. Discuss Impact of Impulse Purchases on Goals
5. Talk Often