Done right, pocket money can help your kids form smart fiscal habits that will set them up for a life of financial security instead of years of money struggles.
It frustrates me that our kids are not taught about money at school. So it is important that we as their guardians, that we give them good lessons from an early age.
As parents’ we’ll all approach pocket money a little differently depending on your family situation but I’ve laid out ideas in this pocket money guide to get you thinking about what could work for your kids!
Why give pocket money?
Pocket money teaches kids about financial responsibility and helps build their confidence with money early on. Major lessons include –
- How to set a specific savings goal (for a toy, game, etc)
- Practicing patience instead of the ‘I want it NOW’ mindset
- Getting into the habit of setting aside money to save, spend and give from each pay
What age is a good time to start giving pocket money?
Most parents start giving pocket money to their kids around the age of 5 or 6; if they want something fun, now it’s up to them to manage their money to get it!
Keep in mind, you can introduce your child to simple money ideas even earlier; the concept of paying for something (grocery shop/cash register games) and counting coins is a good starting point.
What should you give pocket money for?
Giving kids pocket money for completing household chores is the most common reason to fork over the dollars.
It’s a wise move not to give pocket money for every single chore they do though. ‘Basic’ chores should just be part of life; making their beds, cleaning up their rooms and taking care of their own pets.
Incentivise ‘extra’ chores with pocket money like mowing the lawn, doing extra laundry or other responsibilities around the house.
Some parents also give pocket money for glowing school reports and getting homework done on time.
How much pocket money should you give your kids?
What are other parents paying? According to Commbank research, 80% of Aussie kids receive pocket money –
- 4-6 years, the average amount is approx $7.17 per week
- 7-9 years the average drops a little – $7.04 per week
- 10-12 years – $11.37 per week
- 13 – 15 years – $14.11
That’s all a bit mathematical though right?
Some parents pay based on their child’s age, for example, $1 for each year, so $10 a week for a 10 year old.
Obviously, it’s up to you to decide how much your kids should receive based on your family’s own financial situation. If you’ve got 5 kids ranging from 6 – 14, doling out a dollar for each year in age on a weekly basis might take a fair chunk of your own monthly budget!
The amount should be enough for them to learn the basics of good money habits without putting a big dent in your own spending plan.
When to pay
Make pocket money payday the same day each week/ fortnight or month.
This helps kids understand the concept of making their cash last. They’ll soon realise it’s a loooonnng time between paydays when you blow everything on a trip to the movies and Maccas all at once.
I think that’s a lesson some adults still need to learn too!
Let them see the money actually stacking up
Bank accounts aren’t fun for younger kids. A few numbers on a screen? Big deal.
“I washed like two weeks worth of dishes and mowed the lawn every Sunday for a month…show me the REAL money Mum!”
Use money boxes or jars so they can see and handle the money. Split jars and boxes into 3 groups – Spend, Save and Give and encourage them to allocate a portion of every pay into each area.
Write out their goal (Lego set) and the amount they need ($30) and stick it to their savings jar.
You can explain to them how saving different amounts will impact how long it takes to reach the goal – if they save $3 per week, that’s 10 weeks but $5 per week gets them there in 6 weeks.
It’s a good idea to pay pocket money with a mix of notes and coins so they can easily split their allowance between the Spend, Save and Give jars.
Giving
Instilling the habit of giving into your child from a young age is a wonderful thing. The world doesn’t need more kids aspiring to be Instagram influencers, it needs more people with sharing, generous and kind spirits.
Talk with them about how they might use the money they plan to give. Do they want to save it up for a one-off donation or give it away in smaller increments?
Show them the different ways they can do good with their giving jar; maybe they want to donate a gift at Christmas, sponsor a child or make a donation to a cause they like. Let them experience how fun and rewarding giving to help others can be!
Do you give your kids pocket money? Any tips you’d like to share?