Pocket money is a great way to help children learn the basics of managing money. However, how much pocket money you give, when you give it and whether you give it at all depend on your family circumstances and values.
Pocket money basics
Giving pocket money to children as young as 4 or 5 years helps them start learning about the value of money and money management. For example, when children get pocket money, they have to make choices about spending or saving. If they’re saving, they’ll learn about waiting for things they want.
Pocket money can also help children learn about the consequences of losing money. Letting your children make a few mistakes – like spending all their hard-earned savings on fake tattoos instead of something more useful – is part of the learning process.
It’s alright to put limits on what your child spends his pocket money on. For example, you might discourage him from buying candy if that interferes with his appetite for nutritious food or you want to protect his teeth from decay.
When to give children pocket money
There are no hard and fast rules about when to start giving children pocket money.
Your child might be ready to try managing some pocket money if he understands that:
How much pocket money?
This depends on your circumstances and what you think is reasonable. As long as your child understands how much he’ll get and how often, he can start learning how to use the money well.
You can base your decision about how much pocket money to give on:
What should pocket money cover?
Pocket money could cover any of the following things:
Letting your child manage his pocket money is a great way for him to develop a sense of responsibility and independence.
Pocket money and chores
Paying your children to do chores around the house is a complex issue. No single rule is right for every family.
Some families feel that everyone should help with chores just because everyone is a member of the family. Also, linking children’s chores to pocket money might lead to bargaining about how much chores are worth.
On the other hand, some families feel that pocket money should be earned and not just given. Giving pocket money can motivate some children to do chores.
If you do decide to link pocket money to chores, it’s a good idea for the chores to be regular – for example, tidying up the bedroom daily or weekly, throwing the rubbish out daily, feeding the family pet everyday, washing the car weekly and so on. This gets your child in the habit of working to earn money.
You could also consider not linking chores to pocket money, but paying extra pocket money for extra chores.
If you choose to pay pocket money for chores, explain chores clearly so there’s no confusion or bargaining about what needs to be done and when.
Tips on giving pocket money
Here are some pocket money tips:
Learning about money
Your child learns a lot by watching you and how you deal with money. Spending, saving or donating money – they’re all chances to teach your child more about the basics of money management.
As children get older, you can teach them about: