How much pocket money should I give; an age-old question every parent faces when considering giving kids an allowance. While every family is different, and how you manage money at home and with your kids needs to work for your circumstances, here are some suggestions and ideas that might help.
Age: How old is your child?
A popular rule of thumb is to give $1 for every year of the child's age1 So, if your kids are 7 and 9, their pocket money would be $7 and $9 per week.
This is method is simple and provides a basic guideline for parents. But every child is different, and you should consider what your kids need pocket money for, and your own financial circumstances to calculate how much you give them.
Consistency is key
Research shows that regular pocket money trumps ad hoc handouts. Setting a specific day for pocket money and maintaining a regular schedule helps children develop healthy money habits2.
Whether you pay your kids pocket money weekly or fortnightly, make it a regular affair. Choose the same day each week to give them their pocket money so they get into a routine. It’ll introduce them to the concept of a regular income and also help them learn how to budget, spend more mindfully and make their money last.
Pocket money days are also a great time to talk money with your youngsters. Teach them something new, praise them for good financial behaviour or encourage them to do better. It all adds up.
What do they need money for?
Consider all the things your kids need money for when you're working out how much pocket money to pay them. As they grow, give your kids more independence with money. Increase their pocket money, but make them pay their way for things like bus fares or lunches. Not only does this help foster a sense of ownership, but it also teaches them to be more responsible3 and how to prioritise their spending.
Peer comparison and expectations:
While it's normal for children to compare their pocket money with that of their peers, it's important that you address your child's expectations. Help them understand the value of money, not the value of the amount they receive.
Earning extra through chores:
Paying kids for chores is a hotly debated topic. Some argue that it can help teach the value of hard work, while others believe that chores should be part of family responsibilities without monetary rewards4). One compromise is offering opportunities for kids to earn extra pocket money through additional tasks, which can instil a strong work ethic and teach them the concept of earning.
Figuring out the perfect pocket money system for your family might take some trial and error, but the key is to be consistent, flexible, and open to learning from your experiences. Remember, pocket money is not just about the amount you give; it's an opportunity to teach your kids valuable life skills and prepare them for a financially responsible future.