How Much Should the Tooth Fairy Give?

On the occasion of National Tooth Fairy Day (yes, there is such a thing), I received not one but two studies showing that the tiny sprite is taking a bigger bite out of parents’ wallets.

An annual survey by Visa showed that children received an average of $3.70 per lost tooth last year -- an increase of 23% over the $3 per tooth left in 2012. Meanwhile, the Original Tooth Fairy Poll, by Delta Dental Plans Association, a provider of dental benefits programs, found that the average gift climbed to $3.50 last year, up from $2.42 in 2012 -- a 45% gain that even beat last year’s stellar stock market performance, as Delta Dental points out.

Aside from satisfying parents’ curiosity, each poll has an ulterior motive. In Visa’s case, “parents should take this opportunity to talk about saving and smart money habits with their kids, and have the same talk with a perhaps overgenerous tooth fairy,” says Nat Sillin, Visa’s head of U.S. financial education. And Delta Dental says the fairy’s visits present an opportunity for parents to discuss good oral hygiene with their children.

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How much to give. Why such an inflated cost per tooth? Perhaps parents are feeling flush or they’re trying to keep up with the Jones kids. Or maybe they just haven’t thought this through. I’m reminded of an episode of Modern Family in which Mitchell accidentally slipped a big bill ($100, if I remember correctly) under daughter Lily’s pillow because he couldn’t see in the dark. He and partner Cam spent the rest of the show trying to cajole Lily into giving it back.

It seems as if a lot of other parents are similarly in the dark about how much to give. Visa even offers a free tooth fairy calculator -- as an app in the Apple Store and on Facebook -- that makes no recommendations but tells you how much the tooth fairy is leaving in households comparable to yours.

Don’t go overboard. You won’t need a calculator if you use common sense. One reason the tooth fairy appears to be so generous is that a relatively small number of over-the-top gifts are pushing up the average. In the Delta Dental survey, 28% of kids received $5 or more for each lost tooth; in the Visa survey, 6% of those interviewed said the tooth fairy left $20 or more -- and 2% reported $50. On average, parents who were age 18 to 24 were most generous, leaving an average of almost $5 per tooth.

But in the Delta Dental survey, the most common amount was $1 (42% of respondents reported that amount); in the Visa survey, 36% said a thrifty tooth fairy left $1 or less. That makes sense to me. The point isn’t to enrich your child, but to continue a popular custom (the tooth fairy visits about 90% of homes with children, say the two studies).

Make it special. A little creativity is also welcome. One of my Kiplinger colleagues gives his 7-year-old a dollar bill per tooth because it’s convenient -- and to ensure that jingling coins won’t wake up his light-sleeping son, who also gets a certificate describing the lost tooth and showing the date. To make it special, you could give a dollar coin or a crisp new bill. On my shelf at work I have a little silver box in which children can store their lost teeth for posterity.

Over the years of writing this column, I’ve collected many tales from parents about how the tooth fairy operates. One of my favorites comes from a mother whose daughter’s name is Elizabeth. Each time she loses a tooth, she receives a British coin with the picture of Queen Elizabeth on it. Says her mother, “The value of the coin is not important to her, but the idea of a coin with her name on it makes her feel special.”

Janet Bodnar is editor-at-large of Kiplinger's Personal Finance, a position she assumed after retiring as editor of the magazine after eight years at the helm. She is a nationally recognized expert on the subjects of women and money, children's and family finances, and financial literacy. She is the author of two books, Money Smart Women and Raising Money Smart Kids. As editor-at-large, she writes two popular columns for Kiplinger, "Money Smart Women" and "Living in Retirement." Bodnar is a graduate of St. Bonaventure University and is a member of its Board of Trustees. She received her master's degree from Columbia University, where she was also a Knight-Bagehot Fellow in Business and Economics Journalism.