Remember that scene in the old Andy Griffith television shows when Opie asks his Pa for an early allowance? I still marvel at that kid getting twenty-five cents. And remember the spoiled kid who told Opie he needed to throw a tantrum, hold his breath and demand more? Pa handled it with grace. He ignored him. These days, kids are demanding much more than a quarter as their allowances and their temper tantrums have gone high-tech, too.
If you’re like me, I have several of my son’s friends who are on my Facebook list (I am the “cool” mom, after all). I get a kick out of seeing their poorly-disguised posts about how horrible their lives are because they’re stuck with the iPhone 4 and Mom and Dad refuse to kick in the several hundred dollars for the new iPhone 5. I say good for the parents! The kids might be high tech when it comes to demanding more and bigger, but I love to see a parent pull out his “Andy Griffith” parenting book and treat a tantrum the way it should be, which of course, is by not playing into it. That got us to wondering, though, do today’s kids still receive an allowance and if so, how much? And if Mom and Dad are buying everything their little gem’s heart desires, then what are these sweet little buggers doing with their allowance? Here’s what we found:
A new survey by the American Institute of CPAs found that kids indeed still receive an allowance. In fact, on average, parents are shelling out $780 a year in allowances for each child. That equates to $15 a week. It’s what the kids are doing and what the parents aren’t doing that we found so interesting.
Easy Come, Easy Go
First – kids are spending it as fast as they receive it. That means they’re not saving any of it – and Mom and Dad aren’t trying to instill the power of saving. Andy Griffith would have, don’t you know? Here’s where it gets interesting though: that $15 a week is across the board – it applies to kids of all ages. This suggests the allowances are just habits the parents haven’t gotten out of.
Kids are getting everything they want, why else would they not be demanding more the older they get? If they were being forced to use their allowances to save for that new iPhone or skateboard or jet ski, you can bet they’d be negotiating more money every year. While parents clearly want to give their kids everything, we’re missing golden opportunities that will benefit them when they’re no longer kids.
The survey revealed that just more than 60% of parents shell out weekly allowances and half of them have begun providing those weekly allowances by the time their kids are 8 years old. Here’s the shocker: only 1% of parents insist their kids save any of that money. We’re not teaching strong financial habits to our kids. The poll says 95% of parents teach their kids good manners – and I’m wondering where all these well-mannered kids are.
They’re not at the bank opening savings accounts and they’re not out in public practicing those good manners. 87% of parents even said they teach good eating habits, which would account for the new studies that suggest in a very few years, 50% of all kids will be obese. It sounds as though parents are painting pretty pictures though not with the right hues and colors. Regardless, the honesty of admitting they’re not teaching strong money habits rings true.
Money to Burn
Here’s where it gets good: 90% of parents who give their kids allowances also cover all of their other discretionary expenses such as cell pone bills, music downloads and other “wants”. Still, these parents says they’re not overindulging their kids. They say they expect an hour’s work each week for that $15. On average, kids are working 6 hours a week and good grades bring in even more money.
One half of those parents say they expect to “fully support” their kids until at least the age of 22. (You’re looking for that episode of Andy Griffith now, aren’t you?) Twenty two! And it matters little if those kids are in college or not!
Part of the survey included advice for parents. The AICPA’s financial literacy program encourages parents to set definitive parameters on expectations, chores, when they receive it and when they will not receive it (failing to keeping up with chores, for example).
We have a few of our own tips, too.
We always encourage parents to keep an open dialogue with their kids. Define what you believe is age appropriate and then commit to it. Consider a prepaid debit card for your older kids and explain to them the fee structures, why fees exist and other financial 101 guidelines. Many credit card companies offer prepaid cards and even financial advice for parents of pre-teens and teens. Here are a few of the better prepaid cards on the market. Each serves as powerful teaching tools, as well.
PASS Card from AMEX
This is prepaid re-loadable American Express card. It’s designed with teens in mind and with the option of setting it up online, parents can easily monitor their teens spending habits. It can be a fine way to show teens just how much they’re spending on things they’re going to forget next week. Teens love this card because Grandma and Grandpa can add cash quickly and easily for birthdays and graduation and there are no worries about going over the available limits since the card is always denied for purchases where there’s not enough money in the account. It’s an American Express, so you know you have the power of one of the most respected brands behind you.
The student rewards card is offered by another respected name in the business. Bank’s idea of products that offer teaching opportunities comes with a $0 fraud liability if the cards are lost or stolen, there’s no annual fee and the best part is your children can see the benefits of cash back as each purchase earns 1%. Keep up with what the kids are spending with the online tracker.
Finally, for those parents who have teens heading off to college, there are many traditional credit cards that will serve the purpose well. Remember, though, the 2009 CARD Act makes it more difficult for young adults to qualify if they’re in college, so you may find yourself being asked to co-sign an application. If you’ve instilled good money habits, you’ll be able to do so with confidence.