FROM THE NYU CHILD STUDY CENTER: ASK THE EXPERT
Kids and Allowances
When my children were growing up, I found the topic of money and spending a difficult one to navigate with them. Yet it is critically important because kids are really big spenders. Industry, well aware of their spending power, has increased advertising to children and adolescents during the last decade, and currently spends more than $14 billion a year on marketing aimed at children. The average American child sees more than 40,000 commercials a year on television alone, most of which instill a desire for a product.
Parents can counter this deluge of commercialism by instilling values and using everyday life experiences to teach their children about money. Let kids know your personal values about how to save, make money grow, and how to spend wisely. Help children learn the difference between what they need and what they want; kids should know that every wish cannot be granted. By age 6 to 9 children can learn to read labels, be critical of false claims, and comparison shop. Parents can make shopping lists, take children to the supermarket and other stores and have them compare different prices, then gradually phase in other experiences and prepare kids for managing an allowance.
Allowances provide hands-on experience in learning how to allot resources, make decisions, and understand the advantages of saving.
When to start? Experts state that 7 or 8 years of age, when children are also learning about money in school, is a reasonable time to start an allowance, and then adjust it up or down.
Keep the agreement simple and clear. Kids know that they get a specific amount of money on a regular basis and know that they pay for certain expenses, as agreed upon by themselves and their parents. For example, kids can pay for discretionary things, such as their extra toy purchases, movies, and, as they get older, gifts, text messaging, etc. Being in charge of their own money enables children to make decisions and to learn from mistakes. When kids actually have to hand out cash, they learn first hand about how to manage money – how much to spend and how much to save.
Decide on an amount. Experts recommend a formula of $1 per week for every year of age. A survey reported by Kiplinger.com notes that the amount most frequently cited for age groups between ages 6 and 17 was $5 to $9 per week, followed by $l0 to $19 a week. Some parents start with an allowance based on a figure which is half of a child’s age.
Should allowances be attached to chores? Most experts advise parents not to link chores to allowance, but this is a personal choice. Some parents choose to pay children for chores on a per job basis, such as mowing the lawn. If part of the allowance is designated for saving, open a bank account so the child can keep track of his/her money.
Do allowances work? If parents believe in it and stick with it, the system works. #
This monthly column provides educators, parents, and families with important information about child and adolescent mental health issues. Please submit questions for ASK THE EXPERT to Glenn S. Hirsch, M.D., Medical Director at the NYU Child Study Center at email@example.com. For more information about the NYU Child Study Center, visit www.AboutOurKids.org or call (212) 263-6622.