FILED IN: Family Finance

Majority of children spend allowance immediately

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A new study conducted by the American Institute of CPAs shows that while 61% of parents say they give their children an allowance (the average is $15 a week, or $780 a year), only 1% say their children save it.

Children are not being set up with a realistic relationship to money. Although 89% of those aprents say their children work at elast an hour a week to earn their allowance, 90% of those parents also said they cover expenses for thier children, such as cell phone bills and music downloads.

“Parents need to make sure they’re also passing along financial sense with those dollars and cents,” Amin said in a statement. “Earning, budgeting and saving are all important lessons that can be tied to allowances – lessons that can help put children on solid financial footing,” said Jordan Amin, chair of the American Institute of CPAs’ Financial Literacy Commission.

The survey concluded that the reason children aren’t saving their money is that not enough parents are talking to them about money. While 81% of parents said they have taught their children about money, 95% have talked with them about good manners. Those conversations can begin earlier than most parents might think. As Clare Levison, a member of the AICPA’s National Financial Literacy Commission, told Yahoo!Shine in an interview, “Even small children like to get coins and put them in the video games and those claw games and things like that,” she points out. “As soon as your child knows what it means to need or want money, you should start having those conversations.”

Additional source: Deseret News