Parents Teach Fiscal Responsibility Alongside Consumerism

Nearly 40% of American kids get an allowance and are expected to work for it. But will pocket change buy new Ugg boots?

New research by Synovate Inc. indicates that parents are keen on teaching their kids financial responsibility, with 85% of respondents saying they actively teach their kids how to save money; 75% saying they teach how to check prices for items to get the best deal, and 49% saying they teach how to look for coupons.

But while allowances are important in many families, the majority do not fork over these dollars willy-nilly. Rather than providing a regular allowance, 25% of U.S. parents give money to their kids when they want it, and 38% buy them stuff as the need arises. The online survey included 1,600 parents of kids ages 5 to 17 in six countries.

Allowance money does not come free or easy. In the U.S., 96% of kids have to work for their allowance, according to the study. But when a child or teen desperately wants an item, say the latest iPod or pair of fleecy boots, 52% of parents help their kids save some of the money and contribute the rest themselves, and 16% said they buy the item for their child if their own finances allow.

advertisement

advertisement

"Things are too expensive for parents not to help," said Claire Braverman, senior VP/financial services at Synovate. "Children learn that, yes, they want that American Girl doll, but she costs over $100. They realize they'll have to manipulate mom or dad to get what they want. When the kids reach the age of 14 or 15 and are babysitting (or doing other types of work), they start to make the math connection that work will provide them with the money they need to buy what they want. That's the fun part."

When it comes to saving for the really big-ticket items, such as a college education, 66% of parents said they would foot the bill and 34% said they expected their children to be involved in sharing the expense. The survey also found 67% of parents offer input on how their kids should spend their allowance money, but ultimately they let their kids make the final call.

Whether it comes from parents, teachers, financial institutions or the piggy bank on their dresser, kids need guidance, said Susan Beacham, CEO of Money-Savvy Generation, a company that markets financial-services planning tools for kids, schools and banks. The company's signature product is a plastic piggy bank with four sections titled: save, spend, donate and invest.

"We're trying to rid all banks of the one-slot piggy bank," said Ms. Beacham. "We need to teach kids to delay gratification; to stop, think and make a choice."

When is the right time to start teaching children about financial responsibility? Here's what people told Synovate:

As soon as they start asking you to buy them stuff: 33%

Ages 5-8: 26%

Ages 9-12: 25%

Ages 13-15: 12%

Ages 16-17: 4%

Next story loading loading..