Children develop their attitudes towards money from how they see their family using it. One of the best life skills you can teach your child is how to manage money wisely, how to save, how to budget and how to make decisions about what they buy. That includes letting them make mistakes too! Here’s our guide to help you work out How to Decide on Pocket Money for Your Child:
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Results From Our Pocket Money Survey*
We asked Mykidstime parents about pocket money and how much they give and other thoughts that they have about pocket money and their child. Here are some of the interesting results:
How often do you give pocket money?
43% of parents give pocket money once a week, 16% give pocket money twice a month, 6% give it monthly.
Reasons for not giving pocket money include
- My child is too young at the moment
- I buy them gifts when they deserve something
- I give them money if they need it or when I have it
- I haven’t got into the routine of it
Amount of pocket money given
51% of parents give under a fiver for pocket money, 23% between 5 and 10, 13% over 10
Is pocket money tied to chores?
42% of parents say their child has to help with chores sometimes to get pocket money, 38% say they always have to help to get pocket money, 16% say they never require their child to help in the home to get pocket money
Does your child save some of their pocket money?
55% of parents said their kids save a portion of their pocket money while 24% said their child only saves when they want something.
Here are some of the thoughts of parents on pocket money for children
- “I believe my kids should earn their pocket money. Some of their friends get pocket money but don’t lift a finger at home!”
- “It is important to teach the value of saving from a young age.”
- “Starting early with pocket money and chores and saving teaches children money is earned not given freely, it teaches the value of money and the independence that saving can give them. They also appreciate more the things that they bought with their saved pennies.”
- “I tell my kids that whatever they save, I match. That way they are encouraged to save more than spend.”
- “Giving pocket money teaches them the responsibility of handling money.”
- “It’s a great way of teaching children the value of money and that if they want to get something they must save up for it or put something by week by week. Great lesson for the future.”
- “It helps to start the conversation when they are little”
- “Having to do some chores I have found has taught her to be responsible and made her more organised”
- “It is a good idea but can be hard to be consistent when money is not always consistent at home”
- “Pocket money is a hands-on way of learning how to manage money independently.”
- “Lessons can be learned on a small scale but are basically money principles which can be applied throughout life.”
* Online survey of 300 parents during June 2018
You might also enjoy reading 6 Tips for Teaching Children Good Money Skills
At What Age Should I Give My Child Pocket Money?
There is no right age to start giving your child pocket money. It depends on a few things such as
- Whether they are old enough to understand money and to make decisions about what to spend it on.
- What your family situation is and whether you can afford to give pocket money at all. It might not be possible.
- Whether their peers are getting pocket money.
How Much Pocket Money Should I Give My Child?
Factors here to consider include:
- What you can afford.
- The age of the child, so, for example, younger kids would not generally get the same as older kids.
- What the pocket money is expected to cover. You’ll need to decide that in order to set the amount of pocket money.
- The ‘going rate’ – what are other families similar to yours giving their child?
Remember at some point, kids need to learn that families have different amounts of money, and that there will always be other people who have less money and some that have more. It’s also good for kids to hear that lots of money does not always mean lots of happiness too.
Age Appropriate Pocket Money
It’s normal for younger kids to get smaller amounts for pocket money while for older kids, the amount of pocket money will usually increase as they grow older.
So you might start off with a very small amount if they are younger to cover small things and increase it as they grow older but there’s also an expectation that the allowance would cover more.
Some experts suggest $1/£1/€1 a week or month, depending on your financial situation, for each year of age, so e.g. a 10-year-old would get $10/£10/€10.
You might also enjoy reading My Top Tips for Teaching Kids About Money
What Should Pocket Money Cover?
This is up to you but you need to decide what the pocket money should cover. You should decide what needs you want to cover and what wants they should be covering themselves.
For example, pocket money could cover
- treats like sweets or a magazine at the weekend
- saving for something they want, like a new game or toy
- outings like going to the cinema
- donations to charity
What Are The Benefits of Giving My Child Pocket Money?
#1. It shows them that money matters
Pocket money helps show kids that money does matter. And it helps them make decisions about spending.
#2. It gives them independence
An allowance also allows kids to be independent. It gives them an understanding that their actions (saving) can have favorable consequences (being able to afford a much-anticipated purchase).
You might also enjoy reading 7 Tips for Giving Your Child More Independence
#3. It encourages goal setting
They will learn valuable lessons about saving, spending and working toward a goal.
#4. It teaches them about budgeting
If they are in control of their own budgets they can start to learn the value of money. They also start to understand the difference between wanting something and needing something.
#5. It makes them price conscious
Because they now have to fund non-essential things, they start to realise how much things cost and that can help them be price conscious.
#6. It teaches them a real life skill
Parents are the number one influence on their child’s financial behaviour, so it’s up to us to raise them to be mindful about money, to consume sensibly, to save and to give. By letting your child manage their money they can learn these skills.
When they want to buy something with their pocket money teach them how to compare prices, how to check their change etc., these are good lessons for them.
You might also enjoy reading 30 Life Skills Every Kid Should Learn
Tips for Parents on Pocket Money
- Give the pocket money in a way to encourage saving as well as spending so e.g. coins instead of notes so they can start to save.
- Ask your children when they’d like to receive their money and agree what it will be spent on.
- Agree in advance if pocket money is going to be withdrawn if they misbehave. Decide also if they lose their pocket money if there is a way for them to earn it back, e.g. by doing extra chores.
- Allow your child to make mistakes. Realising you spent money on something that wasn’t worth it is a good lesson.
- Do your best not to give pocket money in advance, or top it up, or lend them money they may not be able to repay. Otherwise they will miss out on the opportunity to learn to budget, manage money and live within the means they have.
- Be consistent with “pay days”
- Be clear about what the pocket money is to cover and what you will cover for them. So for example, my daughters get an allowance but they know I will cover buying the clothes and shoes they need. For the things they want, they have to decide what to spend their allowance on.
- You could opt for a give, save and spend system with jars labelled for each, and when your child gets their pocket money they have to put money in each jar. Or for older kids, you might go a step further and encourage them to think about spending and saving into different “pots” e.g. Saturday spending, going out with my friends, new thing I’m saving for
- You and your child might find a pocket money reward chart or a pocket money app (see below) useful to set weekly tasks and track progress.
You might also enjoy reading Take Our 52 Week Saving Challenge to Net Yourself 500
Should Pocket Money be Tied to Chores?
Some parents argue that children should be expected to do chores just because they are a member of the household, and shouldn’t be paid for this. But other parents think it gives children more pride in the money they have if they’ve worked to earn it.
If you are going to pay pocket money based on chores being done then one suggestion is that some chores are a must for the pocket money and others chores are just part of being a household member and aren’t linked to the allowance.
You might also enjoy reading 40 Chores For Kids Depending on Age
Pocket Money Apps for Kids and Other Ways of Paying Pocket Money
There are lots of technology options available instead of having to find cash each week or month too.
PennyOwl, Roostermoney and Piggybot all offer kids the opportunity to receive pocket money and learn about money at the same time.
Osper, goHenry and Nimbl allow you to open online accounts which are controlled via smartphones. Each child has their linked account, all managed through mobile and web applications and then the kids receive pre-paid Debit Cards with parental controls.
My mother who lives in a different country from her granddaughters regularly sends small amounts via Paypal which I send to my bank account and use to treat the girls.
And If You Don’t Want to Give Pocket Money?
There’s no rule that says families have to give pocket money. It’s entirely an individual choice for what works for your family. But if you don’t want to give money, you could have a family voucher or token system that your child can save up for an experience.
Kids love to spend time with their parents and have dad or mum join in with an activity with them. Do they enjoy bowling? Are they old enough to do go-karting? Would they enjoy a visit to a café for hot chocolate and a treat? It could even be a fun activity like playing a board game together.
A Creative Approach to Pocket Money
Finally, we leave you with American mom Essence Evans who has an unusual but creative approach to her daughter’s pocket money. As Essence explains,
“Every week she gets $7 dollars in allowance. But I explained to her that in the real world most people spend most of their paycheck on bills with little to spend on themselves. So I make her give me $5 dollars back. $1 for rent $1 for water $1 for electricity $1 for cable and $1 for food. The other $2 she gets to save or do what she wants with. Now, what she doesn’t know is the $5 is actually going away in her savings account which I will give back to her when she turns 18. So if she decides to move out on her own she will have $3,380 to start off.”
I MAKE MY 5 YEAR OLD PAY RENT. Every week she gets $7 dollars in allowance. But I explained to her that in the real…
Posted by Essence Evans on Sunday, 14 January 2018
Over to you now. Do you give pocket money to your child? Any thoughts or tips on pocket money to share? Tell us in the comments below.