Breaking down allowances for middle and high schoolers
Allowances are popular
More than 60%* of American children receive an allowance.
Many experts agree that an allowance can be a helpful tool for teaching children how to handle money. This lesson is best learned when parents take an active role, explaining to kids why they are receiving an allowance and how to manage it.
*All data, excluding prices, according to a 2012 study—the most recent available—from the American Institute of Certified Public Accountants (AICPA), except where marked.
The going rate varies
You may not know what your neighborhood’s going rate is, but chances are your child does. You may be surprise when you learn how much others are doling out:
The average amount parents pay teens = $65 per month. $780 per year.
That’s enough to buy:
1 Tablet with money left for downloads
2 Gaming systems plus 3 games
4 BMX bikes
Where you live matters
What people think is an appropriate rate for a teen varies by location:
Rural
$14.00/week
Urban
$18.30/week
Suburban
$15.70/week
What can I do?
Middle schoolers—This is a good time to start giving students some of their own pizza and movie money to manage. Don’t be surprised if your child makes some budgeting mistakes in the beginning and comes asking for more cash.
High schoolers—If your child is doing a good job managing pizza and movie money, you could consider giving him some of the cash you would have spent anyway on clothing and other expenses. The more practice he gets now, the better prepared he’ll be when he’s off at college or on his own.
Most kids have to earn it
9 out of 10 parents require their kids to work 1 hour a week.
Experts, though, are split on that strategy. Some like the idea that kids earn their money, but others think the cash should be strictly a hands-on, money-management teaching tool. Kids should still do their chores, the philosophy goes—all members of a family should—but they shouldn’t get paid for them.
And most parents require kids to save it
Many children would rather spend their allowances on snacks and apps.
To combat that, 54% of parents require children to put away at least a portion of their allowance each week.
Source: Consolidated Credit, 2012 (most recent data available)
What can I do?
Middle schoolers—By now, students can be in the habit of saving a portion of their allowance each week. At this age tweens and teens may be ready to save for bigger-ticket, medium-term goals, such as electronic devices and coveted clothing.
High schoolers—Older kids are ready to start putting money aside for larger and longer-term savings goals. In addition to clothing and devices, they could also incorporate prom and even future college expenses.
