Dh and I have left our 10 year old home alone for ~60 minutes, and at this point in time, that's all I feel comfortable doing. And honestly, that's all HE feels comfortable doing. If his little sister is around, then we get a babysitter.
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I would not feel comfortable in your neighbor's situation, even for the 90 minutes, because I don't think that my 10 year old can handle setting limits for the 7 year old. I wonder too if the kids know that she's going out for that period of time. I think it's one thing to leave your kids alone when they know it, it's something completely different if you're just suddenly gone. Maybe my kids are unusual, but even at 7 and 10 they wake up a lot at night. If we weren't home, they'd be completely panicked. No way would I leave kids that age unsupervised during the day. We had a neighbor last summer who couldn't afford daycare for her 11 year old (she could barely afford it for her 6 year old). So, he stayed home 3 days a week while she worked (she took Mondays as vacation time and they were with their dad on Fridays). That 11 year old spent a lot of time at our house. In that situation, we were happy to help. Partly because we knew the mom's situation and partly because he's a decent kid. He wasn't a pain to have around. It was our summer community service.
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This website has an interesting list for laws/guidelines on when it's OK to leave a child home alone. http://www.latchkey-kids.com/latchkey-kids-age-limits.htm Interestingly, most states don't have a law. Our does, and it's 10. I don't know if a 10 year old watching a 7 year old would be considered legal.
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Appropriate care for kids aged 10-12 is a real issue. Most are OK for a bit of time by themselves, a few are OK for longer periods of time. But the reality is that many will let their desire to fit in socially override their good judgment, most don't have the kind of judgment skills you need to employ in an emergency, and most really don't want to be home for extended periods of time. But if your family is struggling financially, what do you do?
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