Starting to give pocket money
70-80% of parents give their children pocket money
You’re never too young to learn, and children that are allowed to manage their own budget at an early age are less likely to run into financial problems later on. Pocket money gives your child a chance to learn the value of money, make choices and save up for bigger purchases. But what’s the best approach to take?
What’s the best age to start giving pocket money?
While toddlers might see coins as toys, primary school children understand the value of money and can manage simple sums. That’s why experts recommend starting to give pocket money from the age of six. In the beginning this should only be a small amount of ‘learning money’, but as the years go by you can slowly increase responsibility and give more pocket money.
How much pocket money should I give?
Make sure you give enough, but not too much. Your child needs to learn that sometimes they have to make a choice.
Everything starts with clear rules. If your children are expected to buy clothes with their pocket money, including items like jackets and shoes, the amount you give will obviously be higher.
Of course, the specific amount will also depend on your household budget. If you’re struggling financially but still giving a lot of pocket money, you could actually get yourself into trouble, which certainly sets the wrong example. So don’t worry about what other parents might say.
What’s the best way to give pocket money?
1. Cash first and then a current account
When children are very young, they learn the value of money more easily with coins and banknotes than with numbers on a screen, so you should start by giving pocket money in cash.
If your child is already (almost) a teenager, a young person’s account might be a good idea. This makes it easy for you to keep an eye on what they’re doing as you can see all of their income and expenditure. What’s more, you can set limits for payments and cash withdrawals, and you can choose whether to allow your child to make online payments.
2. Give money at set times
It’s best to give young children something on a weekly basis. Teenagers, on the other hand, learn the most from managing a monthly budget.
- If your child spends everything, then the fun is over and they have to wait until the next time they get money. This will teach your child to spread their spending over a fixed period of time and set priorities.
3. Open a savings account as well
Smart budgeting means having a little left over at the end of the month, so you should encourage your child to set aside some of their pocket money too. This should ideally be in a separate savings account so that they won’t be tempted to squander the money they’ve saved.
- The law is on your side in this case, because if your child is under 16, they can’t withdraw savings without your permission.
4. Give enough responsibility
If your child only gets pocket money for fun things, they’ll get used to spending on luxuries but not what really matters. That makes it a good idea to give teenagers responsibility for basic expenses such as paying for lunch, clothing, and their mobile phone subscription. This teaches them to split their budget between fun and necessary purchases, which is a lesson worth learning for later in life!
5. Leave room for error
Sometimes, mistakes are the best way for children to learn: personal experience makes a much bigger impact than any well-intentioned lecture. That means there’s no need to make a big deal out of your child’s financial slip up, just look at it as a learning opportunity.
If they’ve splurged on an extremely expensive pair of shoes only to end up never wearing them, discuss it calmly with them and they’ll probably think twice about similar purchases in future.
