You needn't be Mr. Getty to give an allowance

WHEN Gordon Peter Getty was knee-high to a gas pump, he got one quarter each week. A paltry sum, considering his dad was an oil billionaire. Today, thanks to inflation, non-oil-baron kids pocket allowances of $2 and up. A huge sum to be handing over to a 10-year-old, right? But remember, $2 often isn't enough to take in one showing of Steven Spielberg's ``The Goonies.''

Reluctance to dole out what seems like gobs of money to youngsters on a regular basis is but one roadblock to an allowance. Yet, studies show that parents who don't give an allowance (about half of all parents) end up shelling out the same amount as parents who do give an allowance. And kids without an allowance save less, according to a recent survey by Penny Power, a children's version of Consumer Reports magazine.

So why not give a regular allowance and let the kids learn how to handle the money?

Wouldn't it be better to watch your youngster try to manage $2 than watch your adult son waste thousands of dollars? Ranking purchases, the self-discipline of saving, not to mention outsmarting inflation, are skills worth cultivating early. Or so goes the logic favoring allowances.

There are basically three methods of disbursing funds to children: Ad hoc financing, as needs arise; an allowance tied to specific chores; and a regular ``salary'' allowance, with few or no strings attached.

The last is most often recommended by experts to teach money management skills. Most parents, however, tie the allowance to specific chores. And most who give an allowance also pay for special items or outings. No-strings money management

Of several financial planners and parents interviewed, Richard and Karyl Hayes come the closest to using a ``salary'' allowance as a means of teaching money management. Mr. Hayes is director of financial planning at Tucker Anthony Management in Boston, but he gives most of the credit to his wife for their allowance system.

Fifteen-year-old Ric gets $10 every week and 11-year-old Lori gets $2.50. Each has two savings accounts. A short-term account holds allowances and irregular earnings. A long-term college account is built through gifts and money earned from ``regular big dollar jobs,'' such as summer jobs.

The Hayes youngsters can spend the short-term account as they wish -- no strings attached. ``We try to give the kids freedom to make choices. As they get older, they will have more freedom and more choices. This helps them learn how to handle the responsibilities of adulthood,'' says Hayes.

In her book ``Children and Money,'' Grace Weinstein writes, ``Parents who do give allowances are trying to give their children a degree of independence.'' And she contends, ``Opportunities to spend money doled out by parents for specific purposes are not opportunities to make decisions, to plan ahead, to determine value, to make mistakes, or be responsible.''

But no-strings does not prevent Hayes from interjecting some fatherly advice. ``Ric wanted to buy a small motorcycle. I told him I didn't think he ought to. If he did, he would have to wear a helmet and could ride only it on our property. He worked for it and bought it with his short-term funds. But I went in 50-50 on the helmet, since that was something I had stipulated,'' Hayes says.

To fill the long-term account, Ric and Lori must sock away 75 percent of all their non-allowance earnings. ``It's excellent discipline for the kids,'' says Hayes. Household chores paradox

Almost universally, parents expect their children to do household chores without pay. Routine jobs such as emptying wastebaskets, setting the table, vacuum cleaning, washing laundry, and raking leaves are basic contributions expected of every family member, parents interviewed say. No payment should be expected.

But somewhat contradictorily, most parents also use chores as part of the rationale for giving an allowance. An allowance is used to teach the work ethic. If you do your chores, you get paid. If you don't do your chores, your pay is cut or withheld.

In fact, half of the 1,000 children surveyed by Penny Power cited ``not doing chores'' as the reason they did not get their allowances in a given week.

Some observers wonder, with this type of allowance, are parents trying to teach too many things at once? Is the allowance for teaching money management or the cause and effect of working? One lesson may interfere with the other.

And some parents use money to control or modify their children's behavior. Which raises other questions. Can you buy proper behavior, good grades? Do you want to? These kinds of policies can further confuse the messages sent to children about money and its uses.

Nevertheless, it can be difficult to get past the feeling you're giving something for nothing if you don't tie the allowance to chores or behavior. One mother mentioned in the book ``Children and Money'' responds: ``An allowance for kids is like my household money. It depends on what I need, not on the specific chores I do.'' If an allowance, when?

If you decide to give an allowance, when do you start?

The child-development ``experts'' suggest starting as soon as first grade. But everyone is different. It's probably worth giving it a whirl to see how your kids respond.

Christopher Croft, manager of financial planning at Bailard, Biehl & Kaiser in San Mateo, Calif., tried an allowance with his son, Taylor, 8, and daughter, Alyssa, 5. ``For my kids it was a little early. We tried allowances pegged to chores. It broke down because they didn't have a sense of doing things on a certain day. My five-year-old loses track of when to pick up her room and feed the fish,'' Mr. Croft says.

But he figures Taylor will get an allowance within a year. ``He's shown enough responsibility in doing chores and how he's spending money,'' says a proud Croft. ``We've talked about what I do. He's starting to understand that if you put money away and it's a good decision, you will be rewarded.'' Recently, Taylor asked his dad to buy stock in a software company that another friend's father was involved in. ``And he's fascinated by the concept that banks will pay him 5 percent to use his money,'' Croft adds. How deep do we dig?

The next most critical question: ``How much?''

``We paid an allowance that met the `environmental test,' '' comments Claire Cotton, father of four grown children. ``We tried to be a little behind the going rate,'' he chuckles. While this may smack of price fixing, queries at PTA meetings and a phone survey of neighboring parents can turn up these data (see chart on Page B3).

In figuring an amount, parent and child should consider what it covers. You might sit down and discuss with children exactly what their needs are. What will the allowance cover and which expenses will you continue to spring for? If Mark takes piano lessons, will that cost be included in his allowance? Is the price of a weekly roller-skating trip or movie outing with friends to come out of the allowance?

On the other hand, give the children room to make decisions with their money. ``It's important for kids not to have to account for every item. After all, we grown-ups waste money, too,'' says Charlotte Baecher, editor of Penny Power. Don't designate $2 for lunches, $1 for Girl Scout dues, and 15 cents for discretionary spending. Such a paltry sum won't even buy a barrette or baseball cards. Children will probably use some of their allowance to buy flimsy toys and snacks. But they will also discover that if they really want to save for something, sacrificing snacks may be required.

For the parents' part, it's important to be consistent. Decide on a certain day to pay the allowance and don't forget. A businesslike arrangement is part of the lesson.

Also, periodically review the allowance and how it's being spent. Perhaps a raise is in order. Perhaps a cut. If the sum pegged for lunch money is being regularly skimmed for extra candy purchases, maybe lunch money should become a daily allocation.

And keep the lines of communication open so borderline expenses can be discussed. For instance, Michelle might miss out on a field trip because she thought her allowance (now spent) was supposed to cover such things. One final argument for allowances comes from financial planners. They see more parents coming in to set up trust funds or gifts for college.

Ideally, the fund and the child's money savvy will come to maturity at the same time. If a child has been handling money before that point, ``it increases the probability that he'll use the funds wisely,'' says Richard Hayes at Tucker Anthony Management.

For a six-issue annual subscription to Penny Power, send $9.95 to PO Box 2878, Boulder, Colo. 80322. Chart:How much do kids make? Median weekly income of about 500 Penny Power readers Age Allowance Extra money (unearned)*

9 years $2 $1.50 10 years 2.50 2 11 years 3 3.10 12 years 5 3 13 years 5 4.50 *Half of those with allowances say parents gave additional money. Source: April-May 1985 Penny Power Average weekly incomes of 2,500 US teen-agers

Allowance Earnings 13-15 years

Boys $11.35 $11.40

Girls 11.70 11.90 16-19 years

Boys 21.80 31.65

Girls 22.05 32.55 Source: Rand Youth Poll, December 1983