Kids Get Raises, Too

Remember that old Andy Griffith classic? There was an episode, Opie and the Spoiled Kid, where a new kid moves into the neighborhood. He’s quite spoiled and soon has Opie convinced a kid doesn’t have to do chores, but instead, an allowance is something that “the kid is allowed to get”. Before long, Opie, unimpressed with his father’s input about Arnold’s take on allowances, begins to incorporate some of Arnold’s tried and true methods. Opie decides to throw a fit in the middle of the floor at the courthouse, only to have his Pa say, “What are you doing?”, to which Opie promptly ceases his tantrum long enough to answer, “I’m throwing a tantrum”, which is followed by the wise Andy Taylor responding, “Ah. OK. Don’t get your clothes dirty”. Oh, those classics – they take us back, don’t they? Ultimately, spoiled Arnold finds himself minus a new bicycle that was replaced with a trip to the woodshed for a good old fashion’ licking by his own Pa. In the end, Opie finds out earning a quarter for an allowance might not be such a bad thing and life in Mayberry moves forward.

Allowances are Allowed

These days, kids are “allowed”, as Arnold would say, $15 a week, according to a new survey. Even in tough economic times, parents are trying to maintain their assurances that a made up bed and a trip to the trash can every evening without having to be asked will earn them a weekly allowance. Here’s the catch, though: they’re not saving any of that money, and instead, they’re spending it as quickly as they can – lest there be a proverbial hole burned in their pockets.

Kids these days generally receive a bigger allowance as they get older. That said, the average when considering the the region of the country, all of the ages and the parents financial considerations, it averages out to be about $780 a year for the little ones. If only those little ones understood that saving that money would be a huge financial advantage as an adult…that’s not likely to happen since most have no idea how to even define ‘financial advantage’. In fact, says the American Institute of CPAs, in just four years, those little buggars could save enough to buy their own first car. Unless, of course, they’re related to little Arnold from back in the day when his Pa bought him a $75 bicycle, which Arnold explained was his right to demand.

8 is the Magic Number

The survey also discovered that more than of parents – 61% to be exact – not only pay allowances, but they had begun to do so by the time the kids were 8 years old. Less than one percent, however, say their kids save any of it. So why aren’t parents using allowances to instill strong money habits? Parents pay an allowance, and more than half of them starting making these payments to their kids by the time they’re eight years old. Yet only 1% of parents say their child ever saves any of that money.

There could be a reason, though, according to the poll takers. It could be parents are more focused on teaching good manners, the importance of good grades and healthy eating habits – especially when they’re so young. Those strong money management habits might not become a priority until they’re a little older and can better understand the concept. Still, though, 80% of those parents do say they begin to incorporate age appropriate conversations, it’s just that they’re more interested in teaching the other habits. 95% place a priority on good manners while 84% prioritize the drug and alcohol fears at those earlier ages.

Here’s where the surprises come in, though. For those parents who do pay allowances, 90% of them say they also cover all of the other expenses – even when they’re extras the little one should be spending their allowances on. Things like hobbies, cell phones and music downloads aren’t part of the deal that parents make with their kids when they set up the allowance dynamics.

So, are the kids being required to earn that money each week? Ninety percent of parents say they require their kids to work at least an hour each day doing various chores. Most kids, though, work at least 6 hours. In what’s become a bit controversial, some parents even reward their kids for good grades. Other parents insist rewarding kids for good grades sends the wrong message and that not only do they not reward for good grades, but there are consequences for bad grades.

Ultimately though, and there are many studies that support this, those little ones who are taught how to responsibly handle money early on are the ones who will emerge in adulthood with stronger financial habits.

So what are your thoughts? Do you give allowances to your children? Must they work for it?

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