TODAY | October 11, 2012
>>> kids and allowances. they're never too young to learn financial responsibility. how much should you be giving your kids? the author of "money rules." good to see you.
>> nice to see you.
>> it goes without saying that as your kids get older, the amount you're paying them out goes up. and seems like, obviously, we're paying them more than our parents gave us.
>> well, clearly, it's not worth as much when our parents gave it to us. but we're basing this off a study that came from the american institute of cpas. these are the average allowances. they go from about $6 a week for kids from 4 to 12 up to $35 a week for 18 to 24-year-olds.
>> there's a 25-year-old getting an allowance?
>> yeah, that is one of the problematic things out of this research. we know more 25-year-olds are back on their parents' couches. what i hope is that everybody who is giving their kid an allowance is also giving their kid a list of things the parent will no longer pay for. allowance only works when your kid has to take that sum of money and then manage it. if you're still handing them $5 here and $10 there, you're wasting your money.
>> so the idea is interesting. the survey says 54% of parents started giving their kids allowance at 8 or younger.
>> i think that's great. absolutely. kids can learn to make choices about how to allocate their resources at those young ages, just like they can make choices about what to wear in the morning. and if you've ever had a kid go with you to the store and start whining i want this and i want that and, you know, we've been there. you say bring your wallet. bring your money. and then they can decide.
>> all of a sudden they're a little more judicious about it.
>> children do one hour of work a week in exchange for allowance. i know you don't do this with your kids. why do you feel it's wrong to tie chores to allowance?
>> i don't feel it works for every child. kids should absolutely empty the dishwasher, chip in around the house, do something. but you've got to ask yourself, do i have a kid motivated by money? if your kids are more likely to actually do the chores if you tie them to something else like screen time on the computer, tie it to that instead.
>> sure. and where do you fall on this. survey also looked a the the issue of paying a kid for good grades.
>> right, an "a" is worth $16.60 on average. again, who is your child? is your child internally motivated to get good grades? we're starting to see research about the fact that paying kids to stay in school, when kids don't have a lot of resources is a lot of times effective. you've got to look at what's going to get them to do the right thing.
>> you say you should really have -- start having financial discussions with your kids early, right?
>> what kind of discussions?
>> about how much things cost. about how much college is going to cost. about how much you can get for what. kids need to have a basis in reality where their money is concerned. 81% of parents actually do talk to their kids about money not as much as talk to them about good eating habits and not smoking. money is -- it's not like juggling, right? it's not this optional skill that you can go through life and never have to deal with.
>> everybody needs to know how to handle money because this generation of kids is going to have a lot more financial responsibility than we do.
>> and we already have a lot more than our parents.
>> well, thanks for ending on that happy note.
>> talk about it.
>> thanks so much.