Written by Marc R Barnes EA
October 05, 2012

A recent survey conducted by Harris Interactive for the American Institute of CPAs explored what parents are paying their children in the form of allowances. The survey was conducted in July 2012 using a telephone survey of 1,006 parents aged 18 or over.

Allowances: What's Happeneing Today?

Allowances: What's Happening Today?

What were some of the key findings?

  • 61% of parents pay their children an allowance
  • 54% of parents start paying by the time their child is age 8
  • 48% of parents pay their children for good grades (average rate for an A? $16.60)
  • 89% of parents surveyed expect their children to earn their allowance with at least one hour of work per week.
  • On average children spent 6.2 hours per week on chores
  • Only 1% of kids save any of their allowance
  • The average allowance? $65 per month ($780 per year)

Ideas for you

Opinions vary greatly regarding whether to give allowances, how much to pay, whether to require chores for payment, and whether to pay for good grades. If you are considering giving an allowance here are some ideas to consider.

  • Set clear expectations. If you decide to pay an allowance make sure your children understand the rules. When will they receive it? What, if anything, must they do to receive it? What are the rules?
  • Use an allowance to teach other things. Consider using the allowance to teach savings, charitable giving, and budgeting in addition to spending. Perhaps some of the allowance should be used to donate to church or a food-shelf. Have your child save for a larger ticket item like a bike or computer game. Perhaps a teen child should pay for their cell phone. Consider requiring part of the allowance be saved for college.
  • Know the downside. If you require chores for pay, what happens if the work is not done? Perhaps a base allowance would work for you with bonus payments when special chores are done. Using an allowance to help understand the concept of work can be a good lesson if handled consistently. The downside to this approach is that your child may begin to think they should be paid for taking part in normal family activities.
  • Use allowances as a discussion opportunity. A regular allowance gives you an opportunity to help your child learn important financial lessons. This is especially true if the allowance is used for things other than entertainment. This ongoing lesson can deeply establish an understanding for budgeting and savings and help your child create the association of work with income.

Given that schools often overlook this important topic, establishing good financial habits at an early age can pay dividends for your children during their adult years.

Topic: Marriage and Family