Chris Taylor

Cards

09 Jun 2016

Kids pocket money – How much and how often? Top tips for parents

Most of us learn the basics of money management from our parents. How they spend, save, donate, juggle and even fritter their money are life lessons we observe and absorb.  

Pocket money is a powerful tool in teaching children from a young age good financial habits.

Not only do they learn about budgeting, saving and spending, but also about the rewards of working, patience and goal setting – and even the consequences of making poor financial choices.

All of these are valuable life lessons that will stand them in good stead as adults.

The million dollar question, however, is how much pocket money should you give your children – and from what age? And should they get it for nothing, or work for it?

Getting started – top tips for kids pocket money

  • How often? The general rule of thumb is that weekly payments work best for younger children, while older children can benefit from fortnightly or even monthly payments. Generally, the older kids get, the better they willbe at learning to budget and manage money over a longer period of time.
  • How much? How much pocket money you give your children is entirely up to you, and will differ greatly between families. Your income, lifestyle and personal beliefs will guide you to a great extent. Sometimes it helps to talk to other families to get a feel for what they do.
  • Should children ‘earn’ their pocket money? Again, this is a personal choice that will vary from family to family. If you do decide your children should ‘earn’ their pocket money, the trickiest issue will be working out what constitutes ‘family’ jobs (ie. those chores that all family members contribute without thought for payment) and what constitutes ‘paid’ jobs.  As a guide, family jobs could include helping with the dishes, making the bed and laying the table for dinner. Paid jobs could include sweeping up leaves, vacuuming the house or washing the car.
  • Saving or spending? Learning the value of saving from a young age is incredibly important. Consider starting off with the ‘two jar’ system – one jar for spending and one for saving (you could always add a third jar for donating to a favourite charity). You don’t need to put the same amount in each jar – the idea is for kids to understand the difference between saving and spending. As children get older, you can help them create a personal financial budget.

There really are no hard and fast rules around pocket money. What works for your family – and what you feel comfortable with – is the ‘right’ choice. But the experts agree that learning the value of money from an early age is a critical life skill.

 

This advice has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on the advice, consider the appropriateness of the advice for your own objectives, financial situation and needs. Please read the Product Disclosure Statement relating to the product and consider the Statement before making any decision about whether to acquire the product.