Pocket Money: When is Enough Enough?

By: Sarah Knowles BA, MA - Updated: 1 Oct 2012 | *Discuss

 

It's a fact of life: everyone needs money, and we all need to learn how to use it wisely. But when should children start learning about money management basics? Some parents believe that giving their kids pocket money from a relatively early age is a good way to teach them the importance of looking after their cash, others think it's a bad idea. Which one is right?

Points to Consider

Children learn about money from watching their parents. If you buy them everything they ask for without a second thought, it's easy for them to assume that money will always be there when they need it, and it begins to lose its value. If they have to work for it and/or are taught the importance of saving it and spending it carefully, they will appreciate money more once they get older and hopefully be more careful with it.

• Kids as young as four can learn responsibility and the importance of saving
• Pocket money can help children learn counting and other numeracy skills
• Having money weekly helps children learn from their mistakes. Saving up for an expensive toy that they lose interest in after a week is just one example, buying an expensive toy that breaks within two days is another
• Receiving money helps them to make choices, i.e. saving vs spending, which toy, the red hat or the green polka-dot skirt
• If they get pocket money as a reward in return for chores, it can teach them a work ethic

When to Introduce it – and How Much

Giving pocket money is a personal issue that should be decided by every family individually. You should only give what your budget will allow and what you feel comfortable with, making a decision that is independent of what other parents are doing. Of course feel free to ask other parents for advice, but go with your gut instinct on what is right for you and your family.

When considering how much to give, you also have to think about a variety of factors such as your children's age, and their maturity level. Interestingly, some parents give their children the same amount of pocket money, regardless of age, Other considerations to take into account include:

• Will your children be required to purchase family Christmas/holiday and birthday presents with their money, or is it just for themselves?

• Will they have to contribute to bus fare, do they have to finance their own mobile phone or pay for school trips with their money?

• How much will pocket money be dependent on the chores your kids do, how they perform at school or their behaviour at home? Many parents don't like to use money as a reward, and think children should be expected to cooperate at home without monetary recompense. The choice is up to you.

• Will they be saving it for a rainy day or spending it all in one go? Helping them to set up a budget and put some cash aside is important.

• How much of a say will you have in what they spend it on? Even little ones need guidelines, you don't want them to buy a kilo of sweets every Friday!

Pocket Money Management

If you have decided to give your children pocket money, the key is to be consistent. Give it to them at the same time every week, i.e., every Friday after tea. If you decide you want the money they receive to be tied in with chores, keep a chart so they can see what needs to be done, and how much they will get by doing it. You can also just base the entire sum on their finishing everything on the list every week – without complaining!

Remember that giving your children pocket money is not the same as giving them carte blanche to spend money on whatever they want. You will need to set up strict guidelines on what they can and cannot do with their money, while still allowing them to make mistakes. They should have freedom to spend, but only within parental limits. Setting some aside to put into a savings account or to donate to charity also can teach them from an early age about the importance of using money wisely.

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