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Pocket Money - A How-To Approach


An understanding of the concept and value of money is essential for any child, with most children introduced to it through the pocket money that they receive from an early age. There are, of course, no hard and fast rules as to when children should start to receive pocket money, but those as young as four or five years of age may already understand that money is needed to buy things – and, that once it has all been spent, no more is available for awhile. If so, they may be ready to start receiving a small amount of pocket money and start learning about rudimentary money management, as well as achieving some independence.

Pocket money can, of course, be paid to a child unconditionally, as a weekly gift or as a reward for completing certain tasks during the week. Handing out pocket money as a reward for tidying their rooms or clearing the table can help children to understand the concept of earning money without feeling that they are being taken advantage of.

The next question is, of course, how much pocket money your child should receive. Interestingly, recent research has shown that pocket money is does not rise with inflation and that the average amount of pocket money fell from £8.01 per week in 2007 to £6.13 per week in 2008. The average figure does not, of course, provide any indication as to what proportion of pocket money was gifted to children or any other conditions imposed, but in times of economic uncertainty, pocket money does appear to be seen as a means of paying small current expenses. Roughly a third of children do save some of their weekly pocket money, but nevertheless still rely on their parents for more expensive items such as a mobile phone, iPod, and so on.

If you want to manage your child's health as well as his or her spending, you might like to forbid spending pocket money on sweets or chocolate. This doesn't mean that your child has to go without these treats altogether; you can include them in your weekly shopping and issue them in a controlled way. There are plenty of other exciting items such as magazines, DVDs and toys, that your child can be encouraged to buy instead.

So-called "pester power" can also be a problem, particularly if children see their grandparents or other relatives on a regular basis. Grandparents are renowned for their generosity to their grandchildren but can often be seen as a "soft touch" by children – especially if their attempts at badgering their parents into submission have failed. Letting relatives know that you are helping your child to understand that saving for more expensive items is an important and necessary life skill can help them avoid inadvertently undermining your efforts.

Older children may need guidance rather than strict instruction regarding what their weekly pocket money is supposed to cover. Their allowance may, for example, include a portion for essential items such as bus fares or lunch money, and this will inevitably (with perhaps a little help from yourself) introduce the concept of budgeting. If an older child is saving for a more expensive item, it may help to have a proportion of his or her pocket money deducted and paid into a savings account. The child can be involved in the process of selecting a savings account that offers the best rate of interest and allows money to be withdrawn when it is required; this latter point is important if a child is saving for a specific purchase, holiday, or outing.

Many parents allow their children to earn extra pocket money by doing jobs around the home above and beyond what they are normally expected to do. Children should be made aware, however, that there is a limit to the amount of extra pocket money that they can earn in this way and that not every job necessarily has a price tag. Good manners, completing homework or going to bed on time without a fuss are all things that you would expect of a child regardless of financial reward, so make sure that your child understands this. General good behaviour can of course, be rewarded with an occasional outing to the cinema, skating rink or bowling alley instead.

Other related articles from MyEggNest

Activities to do with your children
Books on Teaching children about Money

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www.saveabitspendabit.co.uk - Saveabitspendabit is a unique tool for parents and teachers to teach their children how to save.  They have some great FREE games that teaches children the value of money.

 

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