Should you give your kid an allowance?

As norm hits $30 a week, a debate over the lessons

Melissa Owens, of Squirrel Hill, began teaching her five children about the value of money early — giving them an allowance starting when they were toddlers between 2 and 3 years old.

The kids got 5 or 10 cents for doing simple chores like emptying the waste basket, emptying part of the dishwasher or making their bed.

“It wasn’t the best making of the bed, but they could totally do it,” she said.

As the children got older — today her family includes two boys age 14 and 11, a 9-year-old girl and 7year-old twin girls — the complexity of the chores and the amount of their allowances grew with them.

The children decide how many chores they want to do, keeping track on a white board on the refrigerator. These days, basic chores earn 25 cents, while bigger duties like mopping or mowing the lawn can command $5 or more.

At the end of the week, Ms. Owens tallies the tick marks and pays up — generally a total of $3 to $5 for the younger children and up to about $20 for the older ones.

Ms. Owens is far from alone in using an allowance as a teaching tool.

Two-thirds of parents nationwide say they pay an allowance, with their children raking in an average of $30 a week, according to a recent survey by the American Institute of Certified Public Accountants. The average age of the child receiving an allowance was 14.

Most parents aren’t simply giving their kids a handout. Four out of five say they expect their children to work for the money, an average of about 5 hours per week.

But the Owens family is unusual in at least one major aspect: Strict rules dictate how the allowance money is budgeted.

Ms. Owens and her husband are adamant that their children save a large part of their allowance — 10% goes to the church, 10% goes in a college fund, 20% is set aside for clothing and at least 15% goes into long-term savings for big purchases.

The rest — around 45% — can be frittered away on candy, Pokemon cards or anything the children like, as long as it’s age appropriate, Ms. Owens said.

Conversely, the CPA survey found that only 3% of kids primarily save their allowance, instead blowing it on things like outings with friends, digital devices or downloads and toys.

The accounting group called the

“One of the worst things you can do is just give someone money with no conversation behind it. Then they just think you are a bank.” — David Almonte, American Institute of Certified Public Accountants’ financial literacy commission

3% savings level “alarmingly low.”

“That’s a problem we have to work on,” said David Almonte, a member of the group’s financial literacy commission. At $30 a week, a child could save nearly $1,600 a year.

Parents need to give their children “guardrails” to help control their spending, Mr. Almonte said.

Otherwise, “It’s like not telling a kid how fast they can go on the highway. If you don’t give them parameters, that’s the reason why people go into credit card debt.”

To help teach fiscal responsibility, Mr. Almonte advises parents to share stories with their children about how they gave up something to get something more valuable down the road.

Growing up, his father encouraged savings by offering to match any cash that Mr. Almonte and his four siblings decided to save.

“At the end of the year, my dad would come out with a check for anyone who saved,” he said.

Mr. Almonte also was required to put aside $2 for every $10 he made helping his father — an accountant in a family of accountants — during tax season.

“When I graduated from college and moved away, I had about $2,000 already,” Mr. Almonte said. “Through additional contributions and investing, I was able to grow that substantially over the course of five years and used the money to buy my first house. That’s something I wouldn’t have been able to do if I just spent all of my allowance.”

Parents can help children learn about compounding interest by opening a bank account in their name. “Bring them to the bank to make deposits” so they can watch their money grow, he said.

Mr. Almonte uses trips to the supermarket as teachable moments for his children ages 2 and 4.

“When I bring them to the

grocery store, they will want everything,” he said. “You start having a basic conversation about store brand versus name brand. I give them coupons and let them find the items. We go on the card app and they help me make a payment.”

While the survey showed the vast majority of parents tied allowances to chores, some experts disagree with that strategy, believing that children shouldn’t be paid for doing their duty as part of a family.

Mr. Almonte didn’t have a strong opinion on the matter, but said parents should take the time to discuss spending habits.

“One of the worst things you can do is just give someone money with no conversation behind it,” he said. “Then they just think you are a bank.”

Ms. Owens said her

family’s strict rules surrounding allowances have had some side benefits. Buying some of their own clothing has helped the children learn to take better care of their clothes, she said.

“They find a lot of pride in owning those clothes themselves,” she said.

And doing chores has changed their attitude about being messy. “They’ll say, ‘I just cleaned the bathroom, don’t make it dirty,”’ Ms. Owens said.

“It has really opened up their eyes.”

The commission offers more tips on allowances on its website: https://www.360financialliteracy.org/Topics/ Spending-Saving/The-Basics/Should-you-pay-yourkids-an-allowance.

Patricia Sabatini: PSabatini@post-gazette.com; 412263-3066.