Four in Five Americans Say Allowance Teaches Financial Responsibility: New Survey

Children Are Working for Their Allowances, But Parents Need to
make it a Teachable Moment

NEW YORK–(BUSINESS WIRE)–Children have it easier these days, right? Perhaps not as easy as you
might think when it comes to how they get their spending money. A new
survey found while seven in ten parents (68 percent) currently give
their children an allowance, the children are working for it. In fact,
these children are spending an average of approximately six hours a week
on chores to earn their allowance. The average hourly rate of “pay”
comes out to $4.43 an hour, which is a nice sixteen percent raise from
the $3.82 they were making in 2012. Regardless of if allowance is tied
to chores or not, the AICPA’s National CPA Financial Literacy Commission
recommends that parents use it to teach their children financial
responsibility.

Children receiving an allowance isn’t a new concept. Fifty-seven percent
of American adults received an allowance when they were growing up. Of
those, the vast majority (90 percent) say they had to do at least some
chores to earn it, and of those who did, 70 percent say they had to earn
every last penny. Only ten percent received their entire allowance as a
gift. These are among the latest findings of a new telephone survey of
1,005 U.S. adults conducted in March by Harris Poll on behalf of the American
Institute of CPAs
for Financial Capability Month.

“Providing children with a regular allowance gives parents a perfect
opportunity to have a discussion about the basics of saving, spending
and budgeting. Parents should talk to their children about financial
responsibility and the value of money on a regular basis – this should
not be a one-time conversation,” said Gregory Anton, CPA, CGMA, chair of
the AICPA’s National CPA Financial Literacy Commission. “Instilling
basic financial literacy in children when they are young will better
prepare them for the financial decisions they make as young adults and
serve them throughout their lives.”

The good news is that nine in ten Americans (92 percent) agree that
allowance serves a purpose, with 81 percent saying that it teaches
children the value of money and financial responsibility. Others cited
giving children the ability to purchase their own things (9 percent) and
letting kids afford to do many of the same things as their friends (3
percent). However, the onus is on parents to make sure that the lessons
are sinking in.

“One of the ways that parents can use allowance as a teaching tool is to
encourage their children to save ten percent on a weekly basis and match
the savings if they do. This simple, effective tool will better prepare
them to contribute to a 401(k) account and take advantage of any
matching offered by their employer,” added Anton.

The AICPA’s National CPA Financial Literacy Commission offers the
following tips to teach children about financial responsibility and the
value of money.

  • Use an allowance to teach children the principles of saving and
    budgeting for the things they feel they must have (even though you
    know they may not really need them).
  • Let your child set their own goals, and guide them towards them. This
    helps them learn how skipping the short-term wants – like candy – can
    help them reach their long-term goals –like a new cell phone.
  • Have your child open a bank account. Although interest rates are
    currently very low, they can still learn about compound interest.
  • Take advantage of the articles on the AICPA’s 360 Degrees of Financial
    Literacy website about talking
    to children about money
    .
  • For older children with earned income, establish an IRA with part of
    their earnings (perhaps adding a parental match) to teach them about
    investing and saving for retirement.

Other findings from the survey:

  • Among U.S. adults, men (62 percent) were more likely to have received
    an allowance when they were growing up than women (52 percent).
  • On average, children currently receive $67.80 per month ($814 per
    year) in allowance.
  • More than one in five parents who give their child an allowance (22
    percent) give their child $100 or more per month for an allowance

The AICPA recently added Spanish language resources to the robust
offerings on their 360 Degrees of Financial Literacy website at http://www.360financialliteracy.org/En-Espanol.

For more information on the AICPA survey or to speak to a member of the
AICPA’s National CPA Financial Literacy Commission, contact Marc Eiger
at 212-596-6042, meiger@aicpa.org
or James Schiavone at 212-596-6119, jschiavone@aicpa.org.

About AICPA Financial Literacy Initiatives

360 Degrees of Financial literacy (www.360finlit.org)
is a national volunteer effort of the nation’s Certified Public
Accountants to help Americans understand their personal finances and
develop money management skills. The AICPA and Ad Council have developed
the Feed the Pig program (Feed
the Pig
), a national and localized PSA
campaign designed to improve financial literacy among Americans aged
25–34 by encouraging them to make savings a part of their daily lives.

Methodology

Harris Poll has conducted an annual survey for the AICPA since 2007.
This year’s poll was conducted by telephone within the United States
between March 18 and March 27, 2016, among 1,005 adults (517 men and 488
women aged 18 and over), including 499 interviews from the landline
sample and 506 interviews from the cell phone sample. 295 identified
themselves as parents of children 25 years or younger.

The 2012 study was conducted by telephone within the United States
between July 12 and 15, 2012, among 1,006 adults (505 men and 501 women
aged 18 and over) including 756 interviews from the landline sample and
250 interviews from the cell phone sample. Of these 1,006 respondents,
268 respondents qualified as parents of children 25 years or younger.

About the AICPA

The American Institute of CPAs (AICPA) is the world’s largest member
association representing the accounting profession, with more than
412,000 members in 144 countries, and a history of serving the public
interest since 1887. AICPA members represent many areas of practice,
including business and industry, public practice, government, education
and consulting.

The AICPA sets ethical standards for the profession and U.S. auditing
standards for private companies, nonprofit organizations, federal, state
and local governments. It develops and grades the Uniform CPA
Examination, and offers specialty credentials for CPAs who concentrate
on personal financial planning; forensic accounting; business valuation;
and information management and technology assurance. Through a joint
venture with the Chartered Institute of Management Accountants (CIMA),
it has established the Chartered Global Management Accountant (CGMA)
designation which sets a new standard for global recognition of
management accounting.

The AICPA maintains offices in New York, Washington, DC, Durham, NC, and
Ewing, NJ.

Media representatives are invited to visit the AICPA Press Center at aicpa.org/press.

Contacts

American Institute of CPAs (AICPA)
Marc Eiger,
212-596-6042

meiger@aicpa.org
or
James
Schiavone, 212-596-6119

jschiavone@aicpa.org