Pocket Money – When Should Your Children Get an Allowance?
Should I give my children pocket money or not?
There’s no requirement to give your children pocket money, so the decision is entirely yours. From an educational point of view, the earlier your children get to start using money, the more naturally they will handle it. Also, if you teach them good budgeting skills to practice with their pocket money, they will learn important life skills that will help them later on.
Your child doesn’t become a new employee in your household when they reach 5 years old. So, this is not money they have a right to. You don’t have any extra money coming into your household to provide the funds for this. So what you are really doing is giving your child some control over the portion of your household budget that is set aside for items for them, e.g. for clothes, haircuts, birthdays, Christmas, etc.
Pocket money customs vary from country to country. In Northern Europe and the USA, children tend to receive pocket money at an early age, while in Southern Europe, it tends to be reserved for special occasions.
When is my child ready for pocket money?
Generally, when your child
- can add and subtract
- is looking to be involved in cash transactions
- can read labels accurately
- understands the relationship between money paid and item purchased
- has mentioned pocket money
- has at least one friend who is getting pocket money
Test your child’s shopping skills
Whenever you think your child is ready for pocket money, test it out with a shopping trip. Food shopping in a supermarket might be a good starting point. Before going, discuss how long the food has to last. Do up a menu for that length of time, trying to use as much of the cupboard/fridge/freezer items as you can. Invite suggestions from your child. Try to encourage them to fill in any missing items they can from the recipes on the menu. Ask your child to describe something that’s on the list – like their cereal for example. Explain to them that if they buy a cereal that they won’t eat, that the money for it will have to come from the treat budget. When you get to the store, before you go into the first aisle, tell your child what you are looking for in that aisle.
If your child comes back with your usual brands and everything you asked, they are showing they are ready for more responsibility and are probably ready for control of their treat money…
If your child tries to sneak in a lot of rubbish or forgets half the items, they probably aren’t ready. If however, you want them to take on the responsibility quickly, as their friends already have pocket money, you can speed up their development in this area by getting them to do the shopping each week. This may be a little painful at first (for you) but practice makes perfect!
You can’t tell your child what you are up to, as you are finding out what they will do when they are in control. If, when they go into the grocery store and jump on the first treat they see while grocery shopping, then, when you hand them pocket money, they will spend it fast on something very silly, and be very sorry. Yes, your child would eventually learn that they had no money until next week, but who needs the battle you would face first?
How much pocket money should I give?
The amount of pocket money you give your child should vary according to
- How old they are
- Their level of responsibility
- Your budget
- The purpose of the pocket money (i.e. what they are allowed to use it to purchase)
According to a survey by Halifax (a bank in the UK), British children aged 7 to 12 receive £6.30 (about $10) per week and its £9.76 (about $16) for 12-16-year-olds. However, each child and each family situation is different, so, if your child is only ready for candy money, then they should not be provided with more money than you would be happy to see them spend on treats.
If you are expecting your child to purchase other items with the money, give them a budget to cover it.
How do I organize pocket money?
Before you give the pocket money, explain how it will work and what your child will and won’t be allowed to buy with it. Clearly explain any rules that are involved with it and their consequences.
Ask yourself the following questions:
- When is pocket money provided?
Weekly is generally best to start off with, and on the same day, at the same time is best, as it’s easier to stick to, and to prove that you have kept your word.
- How much to give?
Don’t try to be the same as their friends, make your own decision on the amount, and, if it’s different than what the child was expecting, explain how you decided the amount.
What does it have to cover?
Give clear guidelines, like “all the treats for the week”, including family outings or six haircuts a year.
- Under what conditions will pocket money be lost or reduced?
If your child doesn’t stick to the pocket money rules- so if they spend all their haircut money on Hershey bars, then they lose the right to control that portion of their budget. As the missing money has to come from somewhere, suspend all pocket money for a week or two, or reduce it for a longer time.
- Do I have to do chores to earn it?
There is nothing wrong with asking your child to work for the money they want to earn, but if you decide to do this, the child should get more control over the money earned. With privileges comes responsibility, however- so a chore must be truly completed to a high standard to earn the payment. A reward chart is a very easy way of tracking whether the jobs are done. If chores have to be completed to earn it, each of the chores should have a monetary value.
- Do I give bonuses?
If poor performance gives lower money, then extra effort should be rewarded, just like for a real job. Usually, it should have to be a sustained good performance, in one area, to warrant a “promotion” to a more difficult task, with better pay. Also, the items that your child is responsible for supplying for themselves should increase in line with their larger pocket money budget.
- What happens if they buy something silly or useless?
Use the same rules as you would if it was bought as a gift. If the item is not permitted in your home e.g. markers, then it needs to either be returned (by the child) or disposed of. Either way, the money for the item is forfeited. If it’s simply a foolish choice, then the child can keep it, (and hopefully learn from their mistakes).
- How can I teach them to budget better?
For every shopping trip that they accompany you on, explain what you are trying to buy, why you are buying it, and your budget. Ask them to help to find the item(s) that match what you are seeking. If the item is a little more expensive, ask them to justify the extra money. If it costs less, ask them what they would do with the leftover money.
- When should pocket money be increased?
Increase the amount every year on their birthday, unless you are asking them to earn their pocket money, in which case it should increase as they show more willingness to take on more responsibility.
- What if my child doesn’t want pocket money?
It’s (very) unusual for a child to refuse to take pocket money. It can happen when the child feels that they are not ready for it. Perhaps they feel that it’s just for older children. It’s not something that you should ever force a child to take, however, it is a responsibility that you can encourage. Set a treat day that would be the same as the pocket money day you had planned. Choose the treats that your child gets, within the budget you had planned. Only choose items that your child would like, but don’t offer a choice. If your child complains, point out that with pocket money, your child could make his/ her own choice. Explain that pocket money is for big boys and girls.