Pocket money is more than just a few loose coins each day. Find out what lessons you’re really teaching when giving pocket money to your child.
One of the most asked questions amongst parents is “How much pocket money should we give to our kids?” The average pocket money that a child receives depends on many factors, such as the child’s age, whether the child is given pocket money as a reward or entitlement basis, and how much parents can afford to give. Pocket money, regardless of the amount, helps to teach children about having to make choices, saving up, and about learning to wait for things that they want. They’ll also learn the hard way about the consequences of misplacing it, losing it, or giving it away.
Introducing Pocket Money
Once children start school, it may be a good time to start thinking about giving them a regular income in the form of pocket money. Although research has shown that many parents introduce pocket money when their children are about six or seven years old, there are no hard and fast rules just as there are no right or wrong ways to teach kids about finance and money.
If you notice some of these points below, then your child might be ready to try managing some pocket money.
- They understand that money is needed to buy things from the shops.
- They understand that spending all their money today means there is no more until the next payment time.
- They need money to buy food during recess, to take public transport, and/or to buy a storybook. In this case, pocket money can help your child to plan their daily spending so that their money lasts for the whole week.
Deciding How Much To Give
This depends on your circumstances and what you think is a reasonable amount. As long as your child understands how much they will get (and how often), and that you’re being consistent, they can start learning how to use the money. It’s also a good idea to be very clear about what their pocket money covers and explain it to them. If you find that your 7-year-old wants to save for something special and has been saving responsibly, you may decide to add something extra to help them along a bit. Letting your child spend as they please is an important way for them to understand the concepts behind money, and to develop a sense of responsibility and independence.
Here are some tips to help give you a steer. Do remember that you don’t need to give a lot of pocket money to give your children immense satisfaction and get them thinking about their money wisely.
- Start giving your child a fixed allowance at a young age for them to learn the value of money.
- Give pocket money on a daily basis first, encouraging your child to save 10% of it daily, before moving to a weekly, and then monthly basis. Do this rather than giving lump sums of money.
- Your child should also be given pocket money in smaller denominations so they can save some immediately when they receive it.
- Reward your child each time they fill up the piggy bank. Be sure to get a piggy bank in a size that is relative to your child’s age, or they might get discouraged if it takes too long to fill up.
Talking Pocket Money
Involve your children in discussions about their pocket money. After all, it’s going to be their money. You might make the main decisions, but it’s important to ensure that they understand what the pocket money is for.
Get their input and agreement on those tasks that could earn them pocket money (or bonus pocket money, depending on the type of payment system you’re using). And remember, you have to set the standards in terms of things that are expected of them automatically if you believe pocket money should be for extra tasks that deserve reward.
You could also agree to rotate the tasks each week or month among your children, so that everyone gets a share in the jobs at hand. Depending on how old your children are and the concepts you feel they’re able to grasp, you could also talk to them about saving a certain portion of their pocket money each week. Get their ideas on what they’d like to save up for and help them create a mini savings plan.
Above all, don’t bend on your agreements. If you are paying pocket money for special chores, ensure that if the work is not done, the pocket money will not be paid. If the child spends all the pocket money and asks for more, try not to relent. It’s important for children to learn that money is a resource that must be earned and used wisely.