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Well, That’s An Outrageous Allowance

Poll QuestionWhen it comes to an allowance, a few kids are really raking it in.

T. Rowe Price’s annual Parents, Kids and Money Survey found that 47% of parents give their kids an allowance, with 68% paying less than $10 and 18% less than $20.

That seems like a reasonable amount for helping around the house and learning the value of a buck.

But we honestly can’t imagine what the 6% of kids receiving more than $41 a week are doing. That seems like a lot of cash.

Especially given that the survey found that only a quarter of kids save their allowance for a long-term goal – nearly the same as the number who spend it impulsively and immediately. The majority of kids save their allowance toward a short-term goal.

Regardless, kids don’t seem to be managing their allowance well: 70% of parents say their kids ask for additional money before their next payday.

We’d like to think that parents aren’t giving in, but chances are, they are. Only 19% of parents describe themselves as “not a pushover at all.” And just over a quarter of parents say they give in when their kids beg to buy them something.

(Note to parents: Nearly half of kids think begging works.)

Unfortunately, this research doesn’t dig deep into why parents pay what they pay. But in an article for news wire service Reuters, Stuart Ritter, senior financial planner at T. Rowe Price, gave a couple of guesses:

“There could be a couple of things going on here. One is that as the economy has been getting better, families are feeling a little more stable and are sharing that with the kids. It could also be that parents are simply involving kids in bigger financial decisions. For instance, maybe their allowance is going up – but then they have to pay for half of their clothing bill.”

Let’s hope so.

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How much should kids get for allowance?
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  1. Amy said:
    on February 24th at 08:08 pm

    I think Mr. Ritter has it right, the question isn’t really deep enough.

    Currently my kids are under 10 and we give them twice their age per month. However, if they wanted to take on buying their own clothing or lunch budgeting, I would be happy to give them more money so they could learn about spending with bigger picture items.

    In fact, when my oldest is 10, we plan on having her budget her meals so that she can see the savings possibilities with bringing vs. buying lunch. To do that, she will have to buy her sack lunch ingredients and set up her own budget.

    My parents gave me $50 a month by high school but I was expected to pay for lunch, clothes, and any extras.

    Plus the survey does not mention age.