Giving pocket money to your kids can increase their understanding of money, teach them about the value of things and introduce them to saving and indeed spending responsibly (you can read more on why here). How much pocket money kids receive and by what means it is given is ultimately a personal decision based on your family circumstances – there is no straightforward answer.
That said, there is plenty of information out there to help you with your decision.
This years Halifax Pocket Money Survey found the average pocket money amount children receive in the UK is £5.98 a week. The survey asked 8 – 15 year olds questions around their pocket money and spending habits. In our experience, there are very few kids under 10 lucky enough to get that but how do you determine what to give?
How you give pocket money (regular, based on a reward chart or for jobs and chores etc) and what you are expecting them to cover with their pocket money, will all impact on your final amount.
Giving a regular income
Martin Lewis argues that giving a regular pocket money amount helps teach children to save versus spend and importantly the opportunity cost – would they get more pleasure out of saving for something else rather than getting those sweets now?
Giving a child a regular income regardless of the amount can have many benefits that enable them to plan into the future. They can work out how long it will take them to save for certain things and get a sense of satisfaction as they see their balance creep up. If you are giving a regular amount, think about what your child will need to cover with it – is this for treats and toys only or are you expecting them to put some aside to save? Or indeed if they will need to cover their own clothes or other items.
Performance based pocket money
Simon Lambert, of This is Money suggests that opting for ‘the old parental classic of performance related pay’ can have many benefits. This encourages children learn the link between work and money, giving them a sense of achievement when earning their pennies. Reward Charts are also a popular way of encouraging kids (especially the younger ones) to participate in chores – there is a really interesting comment thread on how other parents approach Reward Charts worth reading.
A combination of both
A combination of these two approaches seems to be the most popular. Giving a certain amount of regular pocket money and topping it up for extra jobs. However, as parenting expert Sue Atkins warns, make sure you are very clear on what jobs deserve to be rewarded with money versus something they should be expected to do as a member of the family. It is also important to note that unearned pocket money i.e christmas and birthdays presents, should be taken account of as well – teaching your kids to manage and save this in the same way as their “normal” pocket money is an important lesson in iteself.
If you do decide to give regular pocket money think about what it will have to cover, ask your friends with kids what they do as well but trust your own judgement. Just remember to be clear with your kids about how you are structuring your pocket money, it is surprising how quickly children learn about money when they are having to make the decision about what they do with it and not you!
Looking for further information?
Sue Atkins, a parenting expert has some great posts on her blog, in particular ‘The Pulling Power of Pocket Money‘ which gives a great age breakdown of when to introduce your child to the world of pocket money. You can also read up and follow Mum blogger Jo Middleton’s experiences with pocket money here as well.