Even kids are making smart money moves during the coronavirus pandemic.
Between getting paid for chores and getting cash gifts over the holidays, children received an average of $455 in allowance in 2020, or $8.75 per week, according to a new study from chore-tracking platform RoosterMoney, which assessed the financial habits of 90,000 of its 4- to 14-year-old users. Weekly allowance for kids dropped more than half, from $30 a week, in 2019.
Still, though they brought in less in 2020 than they had in 2019, kids saved a whopping 45% of their dough last year, RoosterMoney research shows. That's more than the 33% record personal savings rate Americans overall reached in April.
While the young savers in this study were inclined to put money away, there's always more children can learn about handling finances. As families embraced chore routines during coronavirus lockdowns, parents used tasks like washing the dishes or mowing the lawn as a way to teach their children about the value of earning, too.
Here are the top chores from which kids made the most money.
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Average earnings: $2.80
Average earnings: $2.95
Average earnings: $3.07
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Average earnings: $4.26
Average earnings: $6.42
Average earnings: $7.83
It makes sense to teach your children about finances early. Research shows that those exposed to financial concepts at a young age are more equipped to handle money as adults.
Yet waiting too late to start can be a big mistake adults make, legendary investor Warren Buffett said in 2013: "Sometimes parents wait until their kids are in their teens before they start talking about managing money — when they could be starting when their kids are in preschool."
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Video by David Fang
Letting your kids earn an allowance is one method of teaching them about money, and other financial lessons may not be as complicated as you think. For example, you could capitalize on their inclination to save by encouraging them to stash away a set amount each week or month.
Using a physical tool like a glass jar or piggy bank could help them see the money build up. Then, when they're old enough to understand how banks operate, you could open a savings account for them.
"Once you've started with the habit of saving when you're young, you start seeing what saving [money] actually does for you," Clark D. Randall, a certified financial planner and the founder of Financial Enlightenment in Dallas, Texas, told Grow in 2019.
If saving isn't your child's thing, you could teach them to allocate money toward a specific goal instead. In the study, the kids who spent their allowance most wanted Roblox, Fortnite, and other presents. Stashing away for a certain splurge can be a good way to learn to budget.
"There's not some fairy that will come down and get you through until the next paycheck" when you're an adult, Paul Golden, managing director at the National Endowment for Financial Education, told Grow last year. So it's best for kids to learn how to spend, save, and budget when they're young.
Parents are typically the top money influence on their kids, especially as many try to fill in the gaps at home that online learning may not cover: "Now more than ever, building financial capability into our kids is incredibly important," Will Carmichael, RoosterMoney chief executive officer, said in the study.
"The financial impact of this crisis has the potential to affect us for a generation — perhaps several," says Carmichael. "Having confidence with money, building positive habits around saving and learning to make considered spending choices will be something that sticks with kids for life."
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