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Pocket money is one of the first ways children can learn the basics of managing and spending money. It’s a great opportunity to teach them the value of money and useful habits for when they’re financially independent.
The problem is, there are a lot of questions around pocket money to consider, such as how much to give your kids, and whether you can afford to hand your children money on a regular basis! We’ve looked at these questions, as well as a few more below, to help you get started:
Before you agree to a certain amount of pocket money for your children, make sure that you can afford it. If you have a budget, you should ensure that you have enough disposable income to cover the pocket money as well as your other expenses such as bills, transport etc.
If you can’t afford to give your children pocket money, you should wait until you can. Otherwise, you’ll be teaching them all of the wrong lessons about spending when you can’t afford it!
As a rule of thumb, the average pocket money amount is £5 to £6 a week. You should always take into account how much you can afford and how old your children are though.
You may also wish to consider bumping up the amount if your kids do jobs around the house, such as tidying their rooms or helping make the family meals.
Once you’ve decided how much to give, you’ll need to set some guidelines.
You need to define the minimum requirements for receiving pocket money. This could be things like certain chores to be completed or good behaviour.
You’ll also need to see how you’ll be paying out the money – cash or bank transfer? Many banks offer children’s accounts that can help familiarise them with how finance works. There’s also a number of useful apps available that allow children and parents to keep track of pocket money and see what’s coming in and going out.
Most pocket money is paid weekly rather than monthly. Giving a lump sum could encourage your children to spend it all at once. If they’re forced to save up for a bigger purchase, they’ll have more time to consider if they really do want it. This should also discourage frivolous spending in the future.
As mentioned above, you can also offer extra pocket money based on certain conditions such as completion of extra chores (washing the car, cutting the grass etc.) or good school exam/report marks.
There’s a good opportunity to encourage your children to save by offering to match any savings they make in a certain week or month as long as they don’t spend it immediately.
At the end of the day pocket money is about teaching children the importance of working towards a savings goal. The lessons they can learn through pocket money are endless because the real value isn’t the money you give them but rather the ability for them to understand how to manage their finances effectively in the future!