If your business caters to kids, there's some good news on the financial front — they've likely got money to burn from the allowances parents provide. And burn it they do, a new survey shows. Only 1 percent of parents say their kids save any of their allowance.
The average allowance provides kids enough money in a year to be able to buy an Apple iPad and three Kindles and still have money left over, according to a national survey sponsored by the American Institute of CPAs (AICPA). While allowance amounts vary by age, the average allowance totals $65 a month, or $780 a year.
The vast majority of parents do require their children to earn their allowance. Eighty-nine percent of parents expect their children to work at least one hour a week and, on average, children put in 6.2 hours per week on chores. Nearly half the parents with kids in school (48 percent) also pay for good grades — the average going price for an A is $16.60.
Children have broad flexibility in how they spend the money they receive. They most often use their allowances to buy toys or to hang out with friends, according to the survey, as parents handle other purchases. In fact, parents who pay an allowance are significantly more likely to also pay for discretionary items such as sport- and hobby-related expenses, mobile phone service, movie rentals and digital downloads.
"These findings make clear that it can pay to be a kid," said Jordan Amin, CPA, chair of the AICPA’s National CPA Financial Literacy Commission. "Parents need to make sure they’re also passing along financial sense with those dollars and cents. Earning, budgeting and saving are all important lessons that can be tied to allowances — lessons that can help put children on solid financial footing."