Parenting

Parenting: Study claims children spend too fast

Tuesday, September 04, 2012

The results of this study will have you wondering if we are spoiling are children with money. It will perhaps have you wondering more if we are failing to teach our children simple lessons in finance.

The American Institute of CPA's (representing the accountants who are probably trying to get Americans to save a little more, and spend a little less) conducted a national phone survey of parents.

The researchers found that children make some serious coin when it comes to their weekly allowance. An average allowance can provide "a child enough money in a year to afford an Apple iPad and three Kindles and still have money left over."

The AICPA says the average allowance totals $780 per year, or $65 per month, or $16.25 per week. Nearly half of the parents who responded to the survey also shell out extra dough for good grades. The AICPA says the going rate for an A is $16.60.

Here's the catch: the children tend to take the money and go on an immediate spending spree. There was very little left over.

This may come across as children just being children, not understanding the virtues of saving their dollars. It could also be troubling to you, given what has happened to so many people in recent times. There are people who didn't save anything, while at the same time going off spending money they didn't have.

Factor in the current ultra-low interest rates at your bank that may actually penalize people who save money, (they technically lose a small portion of what they save because inflation rates are higher) and you might go ahead and say "I can't blame them."

Whatever the case may be for you, the AICPA thinks children need to understand that there should be limits to spending and should be encouraged to save.

Here are some parental tips the group posted on the AICPA website:

  • Set parameters: Don't just hand out allowance money regardless of whether the chores were finished, half finished, or not done at all. Make sure your children understand what they are earning, and why.

  • Set limits: Don't let them spend it all at once. Require your child to set aside a certain percentage for big-ticket items over the long term, while allowing them to spend another percentage for short-term items.

  • Talk to them about finance: Teaching someone about earning money, saving money, spending money and investing for the future early on can only help in a child's financial development.

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    matt o'donnell parenting reports, parenting, matt o'donnell
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