New Study Finds Parents Pay Kids An Allowance Of $30 A Week On Average
MARY LOUISE KELLY, HOST:
It happens every week in my household. My kids hunt me down, hold out their palms and ask, may I please get my allowance? They are supposed to do regular chores. I'm supposed to hand over pocket money, but how much? Well, a new study by professional CPAs asked parents and found $30 is the weekly average. Joining us now is Michael Eisenberg from the American Institute of CPAs, which commissioned the study.
Mr. Eisenberg, welcome.
MICHAEL EISENBERG: Thank you.
KELLY: First off, just your top line reaction to that number - 30 bucks a week. Did that strike you as high, low? What did you think?
EISENBERG: It was a shocker to me because my kids are a bit older, and they certainly didn't get $30 a week when they were growing up. That's for sure.
KELLY: So what number did your study find in terms of how many - what percentage of American parents do tie the chores to the allowance?
EISENBERG: It's a pretty high percentage. I would say that more than half of the people surveyed were saying that yes, there should be chores associated with the money.
KELLY: Another number that jumped out at me was that just 3% said that their kid put anything aside for savings, and I guess that jumped out at me because one of the goals of giving children an allowance is supposed to be teaching them fiscal responsibility and the value of money. Is that a big disconnect there?
EISENBERG: I think it is a big disconnect, and you see that as the kids grow older. Whether they're in high school or college or getting out of college, their knowledge of financial literacy is very low, unfortunately, because they're not always getting this information at home. They're certainly not getting it at schools, but the place to really start giving this information is with the parents at home.
KELLY: So do these findings point us toward some better way of handling allowance or some better way to take allowance out of the equation completely, some better way to teach kids about money?
EISENBERG: Well, you know, I think the other thing that parents can do is - and I know this is old-fashioned, but it's certainly still true today, and it works - take the young person into the bank themselves. And if you set up a savings account with them and you make deposits into the child's account, you can show them it's getting bigger and bigger. They can see it in black and white, and that's what happens when you start to save.
KELLY: Yeah. Did you get an allowance?
EISENBERG: I didn't get an allowance, but as I got a little bit older in high school, I actually went to work with my dad on weekends. He had a dry cleaning store in New York at the time, and he would have me in the store working.
EISENBERG: And my dad, you know, he gave me some money. That was part of it, but he also taught me the other social skills that somebody needs when they're out in the real world.
KELLY: What about families who are not in a position financially to be able to give allowance of any amount? What is your advice to them?
EISENBERG: What that family can do is sit down and talk with the kids and show them. We have a little budget, and we're spending money here and here and here. But the other thing the parents can do which I think is really important is - you start to talk to the children and say, you know what? Here it is in May or June, and, you know, we're going to be going back to school in August or September, and you would love to have that new backpack. How about we sit down and we say we're going to put away X amount of dollars each week or each month towards the purchase of that backpack or pair of sneakers or whatever it's going to be? So the child has this goal that he or she are reaching for, and the parents are not overextending themselves and also trying to - and will accomplish getting something for the kid when they go back to school, which they would have done anyway.
KELLY: Yeah. It sounds like what you're describing is - it's not the amount that matters. It's the talking to your kids so that they understand the value of money. That's the important thing here.
EISENBERG: That is so true, and the parents shouldn't be ashamed that they don't know that much about finances to talk to their kids. They can talk in very simplistic terms to the child, and the child will get it.
KELLY: That is Michael Eisenberg. He is on the financial literacy commission of the American Institute of CPAs talking there about weekly allowance.
Michael Eisenberg, thank you.
EISENBERG: Thank you.
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