Are Kids Still Getting Allowances? How Much?
A new survey by Creditcards.com found that 40% of children under the age of 18 are receiving allowances. Among the children who get an allowance, the median age at which it begins is 8 years old and the median weekly payout is $4.
Analyst Ted Rossman said cash is still the most common way that children receive their allowances. About 61% of parents still prefer this payment option but 10% of parents pay via mobile payments such as Venmo, 10% use a direct bank transfer, and 10% pay allowances with a debit card (including a prepaid or gift card).
About 15% of millennial parents give their kids an allowance through a mobile payments service, the most of any age group.
Rossman said he likes the idea of paying kids digitally because this is the way of the present and the future. He said the prepaid cards come with helpful features such as budgeting, spending limits and stores that are approved or disapproved.
A troubling statistic from the survey is that 1 in 4 American adults said they did not learn money lessons from their parents. Looking at those who did learn something, more than half learned about saving, and only about a quarter learned about borrowing and investing.
Rossman said a survey that Creditcards.com did a few years ago asked people who their biggest financial influence was and the answer was themselves.
He said one of the greatest gifts a parent can give their child is helping them distinguish between needs and wants when it comes to money. Give them a few extra bucks spending money and urge them to comparison shop and decide on the tradeoffs. They need to realize that when the money is out, it's out. It really forces kids to be thoughtful about what they're buying.
Rossman suggests parents should start talking to their kids about money in pre-school. When they are older, they can have more independence and an allowance. When a teen starts driving, he said it's a good idea to give them a pre-paid debit card or credit card to buy gas, lunch and go out with their friends.
"It's going to serve them well in the long run," said Rossman.