Manal Oliver Virtual Accounting Firm Learns Children’s Allowance Is $30/Week Now
Money doesn’t grow on trees right? And we all learn that lesson an early age. In fact, children’s allowance is another hot topic in parental circles. This week, children’s allowance is center stage thanks to the latest statistics from the American Institute of Certified Public Accountants.
Average Allowance is $120/Month
The Manal Oliver virtual accounting firm found out the average children’s allowance this year is $120 per month or $30 a week. That’s up from $17/week in 2016. Four out of five parents (80%) expected their child to do about five hours of household chores in exchange for that allowance. 14 years old was the average reported age for the allowance, but 4% of parents still gave allowance to teenagers 20 to 25 years old.
Only 3% of Parents Say Kids Are Saving Their Money
Turns out most parents believed that giving their children allowance taught them about the value of money and financial responsibility. In fact, 92% of them said “it was very important that children understand how to effectively manage their money.” However, most children aren’t learning the value of saving. The Manal Oliver virtual accounting firm learned that only 3% of parents said their kids were putting the money aside. Instead, most kids were spending their allowance on outings with friends or entertainment (45%), digital devices or downloads (37%), and toys (33%). $120 a month could potentially save a little over $1400.
Want vs. Need: What’s the Difference?
Even though nearly half of parents surveyed said they talked to their children about money at least once a week, statistics show that the concept of saving isn’t gaining traction. Along with the survey’s findings, a member of the institute’s Financial Literacy Commission discussed the teachable moments surrounding children’s allowance. For example, knowing the difference between “want” and “need.” Understanding the purchase of something that’s short term like a toy vs. long term, like a college education.
$1.68 Hourly Rate Increase Since 2016
Compared to 2016 where the hourly rate for children’s allowance was $4.43, there was a dramatic increase in 2019 to $6.11. The Manal Oliver virtual accounting firm found out there are still mixed feelings about allowance in exchange for household chores. 52% of parents believed the entire allowance should be earned, while 27% taught it should be partially earned and partially gifted ( a more hybrid approach). For others, it’s a pure allowance with no link between money and work, but, separately they’re expected o help out with chores because they’re part of the family and have responsibilities (not because they earn money.)
Use Cash When Giving Out Children’s Allowance
Every family has its own rules regarding children’s allowance, but most follow similar methods. For one, most parents, after deciding to give their kids money every week, they keep the tradition consistent. They’re no sporadic about it. There are boundaries regarding what children will purchase with their own money, and what parents will still buy.
Start Them Young
The Manal Oliver virtual accounting firm knows it’s important to start children’s allowance as young as four or five years old, when kids are in kindergarten. It can help establish a positive relationship with money so kids grow up to be more fluent in financial literacy.