Top tips to manage your child’s pocket money

Posted by iChild, June 05, 2019 6:23 PM

By Erik Bohjort

It’s never too early to teach your kids about money, in fact, research suggests that how we behave around money as adults was learned early on from our parents.

Pocket money is a fantastic and fun way to kick off your child’s basic understanding of money - teaching them how to earn it, how to save it, and most importantly, how to spend it responsibly.

Inforgrpahic

But before getting started, there are a few decisions parents have to make, such as how much to give? And, how often to give it?

Here are some of my top tips to help parents get started.

1: When should I start giving my child pocket money?

Our data shows it’s common for parents to introduce weekly pocket money to their children by the age of five. This allows them to get used to receiving their own money on a regular basis.

But there’s no hard and fast rule here, you know your child best so you should base it on when you feel they are ready. It’s also super important to talk with your children about money too. In addition to giving them pocket money, start involving them in real-life family budget discussions, where appropriate, so they can see firsthand the positive impact earning, saving and spending has.

2: How often should I give my child pocket money?

It is easier for younger children to understand the concept of pocket money on a weekly basis, as they learn to associate a particular day of the week with it. For example, Friday is coming, and that means I get my allowance. Your child will then become used to this process over time.

When you feel your child is used to managing their money well on a weekly basis, you can start thinking about transitioning their allowance to a monthly basis, allowing them to manage their finances like an adult. Typically, this is around 11 years old.

3: How much should I give them?

This is totally up to you as a parent and what you feel is reasonable. We recommend that the pocket money is high enough to:
- Cover basic needs. So you don’t have to pay for your child and they can learn for themselves
- Allows them to save. So your child can start working towards a future goal
- Encourages them to spend some. So they can start to manage their money responsibly

Yet, low enough to:
- Make choices and prioritise. To help them learn the difference between ‘wants’ and ‘needs’

To give some examples, our data suggests the average amount to give a five year old is £2 per week. This gradually rises by 50p - £1 each year they get older so that by the time they are 11 and move from a weekly to monthly allowance, they are typically receiving £20 per month.

Washing up

4: How can I motivate them to earn and save?

On top of a recurring allowance, chores are a great way to teach children that they can earn additional money. It shows them that hard work pays off.

This works even better if they have a savings goal - such as ‘save up for a scooter’ - because they will be able to see how earning money moves them closer to the item they want.

5: What tools exist to help me manage the process?

Gone are the days of keeping track of pocket money through notes scribbled in the back of your notebook! There are now free apps (such as Gimi) that can help automate the pocket money process. And, the best bit is, all the family can use them, allowing your kids to start managing their money for themselves and tracking their progress.

Involving all the family not only takes the pressure off you, it will also increase your child’s motivation to keep their eyes on their saving prize as they watch their money roll in.

App

By Erik Bohjort

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