NEW YORK (
) -- Despite a sour economy, Americans parents still fork over a healthy sum for their kids' allowance, and virtually all of that money is spent and not saved.
data from the New York City-based American Institute of CPAs, the average American family gives $780 to each child for an allowance, or as the AICPA puts it, "enough to buy an iPad and three Kindles and still have money left over."
U.S. parents also are more than willing to pay for good grades. The AICPA says that the average pay for an "A" grade is $16.60.
But all this cash is evidently burning a hole in kids' pockets. The data say 99% of all allowance or grade money handed over to a child is spent, and only 1% is saved.
Some other figures from the AICPA on parents, kids and allowances:
61% of U.S. parents give their kids an allowance.
54% of parents who do give allowances start before the child is 8.
The average monthly allowance is $65 per month (or $780 per year).
48% of parents pay cash for good grades.
The average time kids spend working on chores is 6.2 hours per week.
89% of parents who give allowances expect their kids to work for the money, mostly in terms of doing household chores.
The AICPA says parents could do a better job advising their kids on money and personal finances -- they say there has to be some level of accountability in getting an allowance that goes beyond taking out the trash or mowing the lawn.
"These findings make clear that it can pay to be a kid," says Jordan Amin, chairman 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."
How can parents upgrade the allowance experience for their kids and make them more aware of good personal financial management?
The AICPA advises starting by setting parameters. "If you decide to pay an allowance, make sure your children clearly understand why they are getting it, how to earn it and how to lose it," the AICPA advises.
The group says parents should set a base allowance and provide "bonuses" for good attitudes and better grades at school. The important takeaway for kids is that the money is earned.
Another tip: "Break up" the allowance. Give your kids a valuable lifetime financial lesson by allocating 25% of an allowance for short-term purchases, 25% for "impulse" purchases and 50% for long-term savings such as college or a car.
More on kids and money:
Piggy bank prosperity
Making your kids money savvy
More American families taking extreme measures to pay for college
--By Brian O'Connell
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